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So far Alvernia Capital has created 17 blog entries.
9 10, 2018

What is the Difference Between a Mortgage and a Promissory Note?


Is there any difference between a mortgage and promissory note? People use the terms “promissory note” and “mortgage note” to loosely refer to the same thing. But a mortgage and a promissory note are two very different things. How so? Note A promissory note is an IOU (“I owe you”) on a loan. It is a promise to repay the loan amount to the owner. Unlike mortgages or deeds of trust, promissory notes are not recorded in county land records. The lender holds the promissory note while the loan is outstanding. When the loan is fully paid off, the note will [...]

What is the Difference Between a Mortgage and a Promissory Note?2020-09-25T14:13:25-04:00
3 08, 2018

Selling Your Promissory Note – Should You Consider a Whole or a Partial Note Sale?


Should You Sell a Whole Promissory Note or Only a Portion? When you provide seller financing on property you own, you hold a promissory note.  It’s a promise from the buyer to pay you back. A note is a real asset you own – like cash in the bank. Like many investments, promissory notes are not liquid. If you need money, you can’t withdraw it from the note. But you can tap into the value of a performing note by selling it to a real estate note buyer. You don’t have to sell the entire note. You can sell a partial note [...]

Selling Your Promissory Note – Should You Consider a Whole or a Partial Note Sale?2020-09-25T14:15:08-04:00
5 07, 2018

What Happens When a Buyer Defaults on a Seller-Backed Mortgage?


When a Buyer Defaults on a Mortgage You Hold, What Should You Do? What to do when a buyer defaults? Any decision to offer seller financing involves risk. Buyers do not seek seller financing when their financial situation enables them to secure traditional bank loans. That’s why sellers should: Secure a large down payment on a loan. Set an interest rate that’s higher than what banks can offer. Why? Because buyers who make higher down payments have more skin in the game. That makes a default less likely. Higher interest rates reflect the price a buyer pays for less-than-stellar credit. Even [...]

What Happens When a Buyer Defaults on a Seller-Backed Mortgage?2020-09-25T14:19:40-04:00
8 06, 2018

How to Determine the Value of Mortgage Notes


How Much is Your Mortgage Note Actually Worth? If you provided seller financing, you may wonder about selling a note to free up cash for other needs. One question is: how much is your note actually worth and how do buyer determine value of mortgage notes? Don’t assume the value is equal to the principal owed on the note. In fact, a note’s value depends on a number of different factors. Is Your Note Sellable? Investors invest money in assets to earn an acceptable return. Notes are the same. That’s why most notes can be sold. But if investors can’t make [...]

How to Determine the Value of Mortgage Notes2020-06-16T11:02:55-04:00
1 06, 2018

Lien Positions and Seller Financing Transactions


Everything You Need to Know About Lien Positions and Seller Financing Transactions Have you heard the term “lien position” or “lienholder”? This article sheds light on lien positions and why they’re crucial as you consider seller financing . To understand what a lien position is, let’s start with some background on how a mortgage transaction works. Most people who buy a first home have not saved enough money needed to pay cash for the property. Even if they had, it wouldn’t make much financial sense to sock the entire $200,000 in cash into a home. When interest rates are 4%, and the [...]

Lien Positions and Seller Financing Transactions2020-09-29T16:53:26-04:00
25 05, 2018

Rising Interest Rates and Selling Your Mortgage Note


Do Rising Interest Rates Make Selling Your Note a Better Way to Secure the Cash You Need? During the financial crisis of 2008, the Federal Reserve Bank (the Fed) lowered the federal funds rate. The prime rate – the interest rate banks use to set lending rates for consumers – fell to encourage banks to lend money and spark growth. As the economy improved after 2008, the Fed gradually increased the federal funds rate to as much as 2.4%. (As of April 2020, the effective Federal funds rate is 0.05%.) How Do Rising Rates Affect the Economy? If the Fed raises [...]

Rising Interest Rates and Selling Your Mortgage Note2020-09-29T16:49:17-04:00
18 05, 2018

The History of Seller Financing


The history of seller financing. Most people who want to buy a home start by contacting banks and lenders to apply for a mortgage. It takes considerable due diligence to determine your creditworthiness and the value of the property you want to buy. Once you’re approved, the bank may lend you the money for a home. It’s hard to believe, but this kind of home buying process people didn’t always exist. Imagine living in the early 1900’s, when homes were paid for in full of savings or privately financed with a 50% down payment and a 5-year, variable-rate loan. After 5 [...]

The History of Seller Financing2020-09-25T14:29:26-04:00
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