Mortgage Notes Owner Financing
Mortgage notes are legal documents that describe the specific repayment terms of a mortgage loan. Information regarding the amount of borrowed funds and interest rate, dates and amounts of future payments, and responsible parties are documented within the real estate note.
Mortgage notes are also referred to as promissory notes, real estate notes, deeds of trust and land contracts. Note holders elect to sell mortgage notes for a variety of reasons. One of the most common is to get out of debt. However, funds from the sale of mortgage notes can be used for college tuition or promising investment opportunities
Promissory notes can be sold to mortgage buyers or real estate investors for a lump sum of cash. The transfer of future payments to the note buyer must be legally documented through the court system. This involves executing an Assignment of Mortgage; a legal document stating the terms of payments sold to the note buyer.
Mortgage notes can be sold in whole or part. When partial notes are transferred to a mortgage buyer, a Partial Purchase Agreement must be executed along with the Assignment of Mortgage. The purchase agreement provides further details of the real estate transaction.
When engaging in the sale of partial notes, the original note holder retains ownership of the realistate. The Partial Purchase Agreement states the amount of payments sold. Once these terms are met, the balance due on the mortgage note reverts back to the original owner.
There are several organizations, note buying companies and real estate investors who engage in purchasing mortgage notes. When engaging in this type of real estate transaction, it is extremely important to make certain you are working with reputable professionals.
The Internet can provide a wealth of information about potential mortgage note buyers. Additionally, the Better Business Bureau website is a good resource to determine if the buyer is legitimate or has any complaints filed against them.
Experts suggest interviewing three or more note buyers before making a final decision. Also ask for references and follow-up with each referral.
Organize paperwork prior to consulting with mortgage buyers. Be prepared to provide proof of the face value of your promissory note, balance due and asking price. Know what you want to accomplish and what price you are willing to settle for before entering into negotiations.
In most instances, deed buyers will require the real estate be appraised. Be certain to understand which party is responsible for the cost of appraisal. Generally, appraisal fees are paid by the note holder.
The entire process of transferring mortgage notes to mortgage buyers generally takes 30 to 45 days. Upon approval, the note buyer transfers funds to the note holder and takes possession of purchased real estate notes.
If you need cash and want to sell your mortgage notes, contact Simon Volkov today. Simon specializes in purchasing real estate notes and land contracts and can provide you with a variety of options.
Additionally, we invite you to learn more about buying and selling mortgage notes, real estate investing, and personal money management in our mortgage notes article library.