A Guide to Selling Mortgage Notes

When you mortgage a home, there are several important documents to register to make it official. A private mortgage note is held by a home or property seller. In these instances, the seller may own their property outright and can offer the buyer their own mortgage deal. A benefit to buying mortgage note is to eliminate  the hassles and risks of buying and flipping a fixer-upper, finding and maintaining tenants for a rental or handling 24 hour emergencies. Mortgage notes provide you (the investor) with secure returns. 

 One of the biggest benefits of selling to a note buyer is that it means a single, lump sum of money. The seller gets the agreed-upon payment all at once, and from a trusted financial expert. Selling a mortgage note also means the seller no longer has to collect payments or deal with the day-to-day management of the mortgage, a big benefit to an already busy investor.

If you are asking yourself how do I sell my note, the process is simple. Many note buyers want to buy your mortgage note because these are collateral-backed securities. You need the security you received when completing your financing, which is called a trust deed or mortgage. 

Once you decide to work with a buyer for your mortgage notes, you will receive an offer. Offers are based on the current market, an appraisal of the property, the terms of the note and the company’s competitive rates.

While fees for using a real estate attorney can cost you thousands, most mortgage note companies provide an attorney and directly fund you to give you a competitive rate. You are not limited to the amount you have to sell. You can: sell your entire mortgage note, in turn, you stop receiving mortgage payments and get cash now. Sell a specific dollar amount, so you receive a lump sum of cash now and later will not receive several of your mortgage payments. Sell a percentage of each scheduled payment, so you continue to get smaller payments and a lump sum of cash now. 

Mortgage notes can be an incredible vehicle for building wealth and are one of the more passive streams of income you can get as an active real estate investor. If you do your research and carefully weigh the risks involved, it can be a great way to invest in real estate without becoming a landlord.

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