The mortgage note is signed to offer evidence and security for the financial loan. It describes the stipulations under which the money needs to be paid back. Selling a mortgage note and selecting the most suitable note buyers is a huge choice. It has financial implications that may affect your life for several years to come.
You don’t need to look for note buyers guide because Tom can assist you with selling your note. At the time you are likely to act as a bank you will have promissory note attached to the mortgage you are offering. Another plus with buying a note is that you don’t require any credit or need to qualify. This is quite different in regards to a buying a real property on mortgage. A mortgage note is a significant slice of paperwork to keep in your files for variety of factors. The expression mortgage note denotes the document that addresses the particular details of the loan.
What does it mean buy notes in America?
Whenever a piece of real estate is financed in America there is a note linked to that purchase. Depending on which state you live in you will have to establish a deed of trust or a mortgage. As a matter of fact, it will be established for you. The mortgage is based on a note.
Imagine you need $1000 and I am willing to lend that amount to you. I would want you to write me a promissory note – promising me to pay me back these $1000 within a certain time frame.
What happens to the notes afterwards?
These notes can be and usually are resold. They are resold to other banks or individuals usually at a discount. We distinguish between performing notes – these are notes which are served (by the homeowner for instance) and non-performing notes where nothing is paid. Believe it or not but both kind of notes are traded all day long every day throughout the United States. In my business though I am dealing with another kind of notes. I care about notes between private mortgage note buyers and individuals.
For example: Let’s assume Alexa has a nice property but wants to sell it. Since, Alexa might already have a house to live in and he/she wants to avoid the trouble of being a landlord. Luckily he finds Brody who falls in love with Alexa’s house. Brody wants to buy the house but unfortunately does not qualify for a loan given by any bank. Since a vast majority of the houses sold in America are financed this happens so often. (In the past loans were given easily but 2008 changed a lot; now it’s much harder for people to obtain a loan.)
What do Alexa & Brody do, What’s the way out?
Alexa might say I would rather get a lump sum for my house but since I don’t really need all the money, I might get it in installments adding a nice interest to each monthly pay. They create a promissory note log where all details are noted. This Note is now attached to the mortgage that Alexa is going to give and both documents are recorded at the courthouse.
Since Alexa plays the role of the bank, she
– can collect like $1300 for the next 30 years (assuming a price of $220,000) a down payment of $60,000 and an interest rate of 6%)
– will have collected a total of about $477,000 (instead of 220,000) after 30 years
– can forget about all the landlord trouble and act as a bank.
– move into his own house
– make relatively low monthly payments
– build his credit
This is a true win-win situation. The big problem in this scenario is that Alexa is limited. Though she receives an annual $15,600 but that’s it. This is not too shabby if you wish to build up a retirement plan, is it? However, there are two things that would oppose to this lucky-Alexa’s-point of view. We all know life happens; suddenly there might be gigger obligations than these extra $15,600. But even if all goes well, nothing bad happens to Alexa. However, what about loss of opportunity? What if the deal of a lifetime is just round Alexa’s corner and an investment of like $100,000 would be needed?
What is my role in buying note?
This is where I come in, you can contact us at any day of the week during business hours. I can help Alexa, buy off the rest of the note or part of it. Alexa gets a lump sum for other necessities or new possibilities. Imagine Alexa got these $100,000 from me and could make another $50,000. That’s the price of opportunity I would enable Alexa to maximize.