The real estate world provides so many opportunities, and in ways you may not be aware of. For most of us, when we think of real estate investing, we imagine buying a property and renting it out for a year at a time, and while that is a great long-term plan, it certainly is not the only way to invest in real estate.
One real estate investment strategy is seller financing, also called seller carryback. This is where a person who owns a property outright will act as a lender and sell the property to a buyer, who then pays back the mortgage plus interest. There are many reasons a buyer may take this route, but many times it is because they have bad credit and are unable to be approved for a mortgage from a bank or lending institution. In today’s shaky economy, that type of risk may not be something that is worth taking. There is another option private mortgage lenders should consider- selling the mortgage note. Selling a private mortgage note is an easy process that will allow the private mortgage lender to cash out on their investment now.
What Is a Mortgage Note
A mortgage note is a document that details the mortgage repayment terms and uses the house as collateral. Some of the terms included in the mortgage note are the following:
-The total amount of the home loan.
-How often payments will be made.
-Length of the repayment period.
-Details of the interest rate – fixed or adjustable, amount, etc.
-Prepenalty amount, if applicable.
Most of the time, the mortgage note is held by a private lender, but with seller financing, the seller holds the mortgage note, and the buyer of the property pays a monthly payment to the seller just like they would with a traditional mortgage.
In many cases, the terms of seller financing will be shorter, and a balloon payment will be due at the end of the term – typically five years. The idea is that the buyer will refinance their loan and pay off their private lender. If the buyer cannot perform or misses their monthly payments, the private lender can foreclose on them and take back their property.
While seller financing and private mortgage notes are fairly common, selling private mortgage notes is still something that has yet to be discovered. In today’s market, liquidating private mortgage investments could be an excellent idea. Let’s look at some of the advantages.
Advantages Of Liquidating Private Mortgage Investments
There are many reasons for liquidating private mortgage investments, especially in today’s volatile economy. Receiving monthly payments from the homeowner is nice, but maybe you need more than that.
When you sell a mortgage note, you will get a lump sum of cash to use however you need. Maybe you have debt you’d like to pay off, or perhaps you’d like to invest in more properties as home values continue to fall. The cash you receive from the sale of your mortgage note will allow you to do so. Maybe you’re ready to retire or just want to have some fun– selling your mortgage note could help make that happen, too!
Not only will the sale of your private mortgage note give you the cash you need to reach other financial goals, but it will also reduce the stress associated with being a lender. We don’t know where the economy is headed, but many families are struggling right now. What will happen if your buyers aren’t able to make their payments? Selling the mortgage note will remove those fears and that risk.
How Do I Sell a Mortgage Note?
The process of selling a private mortgage note is not complicated. There are many companies who are ready and willing to buy mortgage notes, and what’s really neat is that you don’t have to sell the entire note. Instead, you could sell off a specific dollar amount or a percentage of the total amount so you can receive a lump sum while still receiving smaller monthly mortgage payments from the homeowner.
If this selling your private mortgage note is something you are interested in, contact Rocket City Note Buyers. We are here to provide knowledge and opportunity to note holders, and of course, cash. We take pride in making the process easy and painless and can get you the cash you need quickly. Let’s get the process started today!
