Answers to Questions on Selling Your Mortgage Note
What are the potential benefits of selling your mortgage note?
To help you learn a simple, practical way to invest in real estate, we answer questions from investors like you on this page.
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What Changes Might Prompt You to Sell a Mortgage Note?
Owner financing is on the rise. More and more sellers are agreeing to accept monthly mortgage payments from buyers.
Many people sell a mortgage note as financial circumstances change. Perhaps you were laid off, or need cash for unexpected bills.
People sell a mortgage note to free up money to:
- Start a business
- Invest in a new opportunity
- Pay college tuition
- Go on vacation
- Get relief from worrying about whether mortgage payments will arrive on time.
Instead of receiving small monthly payments from your note, you can choose to sell the note for a lump-sum cash payment.
How to Maximize the Value of Your Promissory Note?
The initial value of your note is determined when the property is sold. To maintain or improve the note value, you should:
- Keep accurate records of payments received from the borrower.
- Provide verification that property taxes were paid, along with a schedule of due dates for future property taxes .
- Maintain copies of property insurance policies for each year.
These documents may be requested for a variety of reasons. Keeping them organized helps you preserve the value of your note.
Should You Sell a Whole Promissory Note, or Only a Portion?
When you decide to sell a note, you can sell all of it or only a portion.
When you decide to sell a portion of a note, you receive a lump-sum payment up front. After a specified amount of time passes, the note reverts back to you and your cash flow resumes.
If you need only a small sum now and want to maintain your investment for the future, this approach is ideal.
Our team works with you to determine which options fit your needs best.
How Do You Determine the Value of Promissory Notes?
The value of your note is determined by the:
- buyer’s down payment
- interest rate
- monthly payment amount and terms
- buyer’s payment history and credit score
- type, condition and value of the property.
Given inflation and the time value of money, payments made today are worth more than future payments. Inflation rates and time value factor into the evaluation that determines the value of a note.
How Does Selling Your Promissory Note Affect the Payer?
When you sell your note, the payer experiences a minor change. They need to change only where their payment is made. Everything else stays the same.
How Do You Receive Funds When You Sell Your Note?
Funds in the amount of the predetermined purchase price are sent to the title company via wire transfer or cashier’s check, once all the documents are finalized and signed.
Sending funds to the title company enables you to exchange documents for funds, assuring a safe and secure asset transfer.
What Steps Do You Take to Sell a Promissory Note?
To get started with selling a note, request a quote here.
To get a quote, please provide these documents:
- Note and Mortgage (Deed of Trust or Contract)
- Closing Statement (HUD-1)
- Buyer information
- Payment history and outstanding balance
- Previous title insurance policy
- Current hazard insurance policy.
Still Have Questions?
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