The value of your mortgage note is dependent upon several variables. Many of the items that affect the value of your mortgage note were determined at the time the property was sold. However, there are certain things you can currently do to make your note worth more.
How much a mortgage note sells for comes down to risk. The less risk involved in the note, the greater its market value. It doesn’t matter how much the seller has put in, the investment is only worth what the market is willing to pay.
There are four main factors that influence the value of a mortgage note:
- The higher the interest rate means the higher the return
- Who created the note, what is its performance history, and what is the risk of a law violation.
- Payback terms and whether the seller is on a 30-year or less contract.
- The payback frequency matters. How often repayments are made to the mortgage note is critical. A note that has annual repayments will be worth less than a note that requires monthly.
To help maintain the value of your mortgage note or to make it worth more, there are three steps you can follow:
- Keep good records of payments received and make copies.
- Obtain a copy of the property insurance policy from the buyer each year.
- Verify the property taxes are paid when due.
The key to increasing the note value is keeping accurate records of payments received. The added benefit of recording keeping is that it also establishes a record of payment habits. There are two main ways to keep track of payments on mortgage notes, outside services or seller direct. Sometimes a payment history affidavit can substitute for a payment record, but it will not add to the value of the mortgage note. By keeping records of payment history, you are lowering the risk involved in the note, making the market value greater.
Not all mortgage notes have the same value. Here are some tips for getting the best value from your note:
- Beautiful residential properties or contracts that include a building and land are more likely to sell.
- You may receive more value if you only sell a portion of the note. In fact, in certain instances, you can receive more than the current value of your note. We can go over the different options with you.
- If you sell payments that are due within the next few years, you will get a higher value.
- When low-interest rates dominate the market, the value of a note with a higher interest rate will be higher.
- The higher the credit of the property borrower/buyer, the more money the mortgage note will sell for when taken to the market. Seller financed note transactions are completed due to the fact that the property borrower may have a lower credit score. As long as the credit score is 580 or higher, the note has a chance of selling. The higher the credit score is, the higher the offer will be for the note.
At Beacon Capital 360, we realize that selling your mortgage note can be one of the most important financial decisions you make. That’s why we want you to be able to get the best possible value for your mortgage note. Discover your options and see how we can help by contacting us today at 800-460-4159 or visit us at https://beaconcapital360.com/contact-us/.