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When most people think about selling mortgage notes, they think about industry giants. However, there is a robust world of consultants, private buyers, and financial intuitions interested in buying mortgage notes. They have money or connections with those that do and are eager to step in on a quality note. An important question to ask yourself is, “What do I really need to know before I sell my note?”
Why sell my note?
When it comes to mortgage notes, there is a multitude of reasons people choose to sell. Retirement, taxes, expenses, vacation, college, the list goes on and on. The only way to decide what is best for your personal situation is to know all the options available. If you own a note and are curious as to what the current market value of your payments will be, click here.
Selling options
There are different options available when it comes to selling your mortgage note. The steps are to gather all of the details of the note you own, provide those details to a note purchasing company for a free quote, examine the quote, and close if you choose to sell. You can either sell the entire note and receive a lump sum or sell a portion of the payments (usually five or ten years), receive one lump sum for that portion of the note and at the end of that period, the note and remaining payments go back to you. In this way, you end up receiving more principal (plus interest), than the original face value of the note. With a partial note sale, you actually receive more principal than the value of the note. This is an option that every note seller should give serious consideration to. Beacon Capital 360 specializes in these transactions as they are financially more beneficial to the seller depending on their specific needs.
Here are factors that determine the cost of your mortgage note:
- First position.
- Length of the term.
- Borrower’s credit rating.
- The interest rate.
- Down payment amount received.
General Information
Remember that notes are purchased at a discount. The buyer of the note will have expenses in obtaining your note like a title search, drive-by appraisal, and closing. They will want to cover expenses and earn a return on their investment. If you do not use an outside servicing company to collect monthly payments, be prepared to gather canceled checks and show deposits. Also, know that your creditworthiness is not an issue, it’s the buyers’.
Who do I sell my note with?
Brokers, also known as consultants, can be a great option for selling your note. They often work with many funders, giving you multiple choices when selling. Working directly with investors is also a good option for a more streamlined process. If you deal explicitly with note buyers, it’s best to get a few bids. You always want to get fair market value for your 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 filled with every piece of knowledge possible before selling your note. Customer satisfaction is our number one goal! If we can help you with selling your note, call us at 800-460-4159.