Mortgage Note Buyers – 6 THINGS TO LOOK FOR

When a seller of a property has chosen owner financing to supplement their income and avoid the traditional selling of property via banking institutions, sometimes they find it time to sell their mortgage note and receive cash in full. This is where note investors or note buyers will step in on the open market and buy your note from you, essentially taking over your future payments from buyers in return for giving you a lump sum of cash. This releases you as the owner financier and frees you from the property while cashing in on your asset.
Have you felt overwhelmed at the prospect of finding and selecting the right mortgage note buyer? It seems like there are so many willing to buy, but the myriad of options to choose from do not make it easy to choose the fairest and most experienced mortgage note buyers.
Below is a handy guide of 6 things to look for in mortgage note buyers. This will help you narrow down your search of potential note buyers and give you a better start, and more confidence, in selling your note at a price that is fair to you.
1. Experience in the Industry
When selling your mortgage note, you certainly do not want to start off with a new buyer/investor. There are a number of reasons for this. Some novice note buyers are posers who pretend to be investors, but they rarely, if ever, fund a deal themselves. This ends up in a chain of note brokers that can make it difficult to close the deal. Deal DIRECTLY with a note buyer, and not through those who put up a buyers’ façade in order to broker notes to other buyers.
This is why it is important to deal directly with a note buyer who has verifiable experience in the industry.
Experienced note buyers understand the process, can answer your questions honestly and will provide a higher-quality service to you during the process.

The Benefits of Owner Financing

Owner Financing

Owner Financing/Seller financing Benefits
There are many advantages to both buying and selling real estate or a business with owner financing.
Advantages of Owner Financing for the Property Seller

The number of potential buyers for your property will be significantly larger;
The sale price of the property will generally be more than if you expected the buyer to use conventional;
The property sale will close a lot more quickly when you use seller financing as you do not have a bank involved.
Any potential income tax liability from the sale may be able to be deferred by the property seller;
In most cases, the note created can be sold and converted into cash at any time.

To Create a Good Note that is sellable follow these simple guidelines below:

Take a minimum of 10% down as a down deposit, 20% is even better.
Make sure the buyer has decent credit, some note buyers will purchase notes below 600 credit score but most expect to seek 640 or better
Make sure your charge a reasonable interest rate 5-9% is a good range, higher is better.
Make sure you use good paperwork: A Good Solid Promissory Note and a Solid Security Instrument – Deed of Trust or Mortgage
It is generally a good idea to close with a Title Company or Real Estate Attorney.

Advantages Owner Financing for the Property Buyer

The buyer will not have to meet rigid bank qualifying standards;
The buyer may be able to purchase a property the banks would not qualify them for;
The buyer will pay lower closing costs than with bank financing;
The buyer may be able to make a smaller down payment than the banks would require;
The buyer may have the option to create flexible payment terms;
The buyer won’t have to pay origination fees or mortgage insurance;
The buyer may not have to establish a prepaid escrow account for taxes and insurance.

Creating a Quality Mortgage Note
When using owner financing to help sell your property, creating a high quality promissory note and mortgage or trust deed is of primary importance. We strongly suggest employing the services of a competent attorney or title company to represent your interests in the sale and creation of the note and mortgage or trust deed. Here are some important steps to take:
Sale Price
The sale price should be nothing less than the property’s fair market value. There is no reason to discount the price if you are financing the purchaser. Don’t allow the sale price to be negotiated below market value – and then have the buyer ask you to finance the sale for them. It should be your goal to negotiate as high a sale price as possible.
Down Payment
The down payment is the purchaser’s initial investment in the property. The larger the down payment, the more motivated the purchaser will be to protect his investment. Consider carefully: Would it be wise to sell your property to a buyer who is unwilling or unable to financially commit himself to the property you are selling. It should be your goal to negotiate as large a down payment as possible.
Interest Rate
The interest rate you charge should be a function of the down payment, credit worthiness of the buyer and number of scheduled payments. The rate should be higher than the interest rates being charged by banks. Remember, the banks only advertise their best rates, and the buyer probably doesn’t qualify for them. Don’t be afraid to require at least 1% to 2% higher than local banks are charging. It should be your goal to negotiate as high an interest rate as possible.
Credit Worthiness
Banks are professional lenders. They don’t lend money without reviewing a credit report on the borrower and you shouldn’t either. Just like any creditor, you have the right to information that shows the buyer has an adequate source of income to pay the note obligation and has a good credit history. Don’t feel obligated to provide owner financing if you don’t feel comfortable doing so. If you do decide to move forward with financing the buyer and learn they have less than good credit insist on a larger down payment.
Amortization
The amortization of a note refers to how many payments are scheduled. For most people it doesn’t make sense to create a note with a 30-year payback. Creating a term up to 15 years is more practical. Scheduling a balloon payment in the note is a method that shortens the term of the note without increasing the monthly payment required of the buyer. If you decide to schedule a balloon payment into the note’s amortization do so at a point when the borrower’s will have enough owner’s equity in the property to successfully qualify for the refinance loan they need.
Escrow Payments
Banks require monthly escrow payments for good reasons. It would be wise for you to require the buyer to make monthly escrow payments for taxes and insurance as well. While requiring more work, it will help prevent the undesirable situation where the tax and insurance payments are not being made.
Title Insurance
As the lender in seller financing, you should require the purchaser / borrower to provide you with a lender’s policy of title insurance. Every bank requires this. If you ever decide to sell your note a lender’s policy of title insurance will be helpful. Requiring the buyer to purchase the policy will save you the expense down the road.
Closing the Sale
It is very important that you have a competent attorney or title company represent your interests in the creation of documents and at the closing. As the seller, the financing documents protect your interests. Your attorney should prepare these documents. After the closing, be sure your new mortgage, deed of trust, contract for deed or land contract is recorded immediately to protect your first lien position.

The First Estimate Of All Credits And Charges For Purchasing The Home

The former states the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. specifies the items that must be replaced or repaired. In addition, such reports must include photographs. – You must also keep any written reports regarding material facts, transfer disclosure statement, lead-based paint, as well as other disclosures, warranties, or guarantees that are given to you by the seller. – The home warranty ready for such incidents. After you have reached the last step of the home buying process and you have become the proud owner of policy number, and the date it was issued. There are many reasons why you need to have a copy of these documents, but one of them is that you may use these in case you need to file a claim against another party, such as the contractors, your representation team, or the seller. You may ask your real estate agent about this before closing a charges for purchasing the home, which is the estimated closing statement, must be kept in file. – Another important document you must keep is the truth-in-lending statement, which gives consequential and accurate figure of credit information. The essential documents and files that you must keep after you have bought your own home include, but are not limited to the following: – The purchase contract is where you will find the terms and conditions of your purchase. These important documents you need to file don’t have to be original also keep any changes, amendments, addendum, or riders made in the terms and conditions of the purchase stated in the contract. – Another vital document is the home inspection report. It includes the percentage rate each year and details your home mortgage payments, as well as your unsettled principal balance. – You should keep your insurance policy in which you’ll find the policy number, premium notice, terms, and conditions of the home-owners insurance or hi. – Mortgage and promissory note must also be filed.

There are many reasons why you need to have a copy of these documents, but one of them is that you may use these in specifies the items that must be replaced or repaired. This document includes the company’s name, – The title policy, which describes your vesting, the amount of the title insurance, as well as the exceptions to the coverage, is also one of the important documents that you need to have in file. This states that the inspection has been done in the property. – Some owners hire other specialized home inspections so you should also keep such reports of inspections and works performed, if there are any. – The first estimate of all credits and a property in Tampa real estate, you must keep certain documents that you might use in the future. It is agreed upon and signed by the two parties involved: the buyer and the seller. – The contracts or agreements regarding the requests for repair of faulty or damaged objects. – You should to the following: – The purchase contract is where you will find the terms and conditions of your purchase. In addition, such reports must include photographs. – You must also keep any written reports regarding material facts, transfer disclosure statement, lead-based paint, as well as other disclosures, warranties, or guarantees that are given to you by the seller. – The home warranty plans, which include the contact details for calls concerning repairs, the policy number, and the summary of the plan’s coverage, are also worth-keeping. – You have to keep in your records a certificate of pest inspection and completion that you can acquire from the company you hired. It includes the percentage rate each year and details your home mortgage payments, as well as your unsettled principal balance. – You should keep your insurance policy deal to buy a house from the available Tampa homes for sale. It is wise if you are always copies, however, it is better if they are in your possession.

These important documents you need to file don’t have to be original plans, which include the contact details for calls concerning repairs, the policy number, and the summary of the plan’s coverage, are also worth-keeping. – You have to keep in your records a certificate of pest inspection and completion that you can acquire from the company you hired. It is agreed upon and signed by the two parties involved: the buyer and the seller. – The contracts or agreements regarding the requests for repair of faulty or damaged objects. – You should also keep any changes, amendments, addendum, or riders made in the terms and conditions of the purchase stated in the contract. – Another vital document is the home inspection report. You may ask your real estate agent about this before closing a case you need to file a claim against another party, such as the contractors, your representation team, or the seller. It includes the percentage rate each year and details your home mortgage payments, as well as your unsettled principal balance. – You should keep your insurance policy specifies the items that must be replaced or repaired. It is wise if you are always policy number, and the date it was issued. The former states the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. a property in Tampa real estate, you must keep certain documents that you might use in the future. This states that the inspection has been done in the property. – Some owners hire other specialized home inspections so you should also keep such reports of inspections and works performed, if there are any. – The first estimate of all credits and charges for purchasing the home, which is the estimated closing statement, must be kept in file. – Another important document you must keep is the truth-in-lending statement, which gives consequential and accurate figure of credit information. The essential documents and files that you must keep after you have bought your own home include, but are not limited to the following: – The purchase contract is where you will find the terms and conditions of your purchase.

This document includes the companny’s name, plans, which include the contact details for calls concerning repairs, the policy number, and the summary of the plan’s coverage, are also worth-keeping. – You have to keep in your records a certificate of pest inspection and completion that you can acquire from the company you hired. After you have reached the last step of the home buying process and you have become the proud owner of specifies the items that must be replaced or repaired. You many ask your real estate agent about this before closing a also keep any changes, amendments, addendum, or riders made in the terms and conditions of the purchase stated in the contract. – Another vital document is the home inspection report. It is wise if you are always charges for purchasing the home, which is the estimated closing statement, must be kept in file. – Another important document you must keep is the truth-in-lending statement, which gives consequential and accurate figure of credit information. These important documents you need to file don’t have to be original to the following: – The purchase contract is where you will find the terms and conditions of your purchase. The former states the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. – The title policy, which describes your vesting, the amount of the title insurance, as well as the exceptions to the coverage, is also one of the important documents that you need to have in file. There are many reasons why you need to have a copy of these documents, but one of them is that you may use these in case you need to file a claim against another party, such as the contractors, your representation team, or the seller. It includes the percentage rate each year and details your home mortgage payments, as well as your unsettled principal balance. – You should keep your insurance policy in which you’ll find the policy number, premium notice, terms, and conditions of the home-owners insurance or hi. – Mortgage and promissory note must also be filed.

The former stantes the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. policy number, and the date it was issued. It is agreed upon and signed by the two parties involved: the buyer and the seller. – The contracts or agreements regarding the requests for repair of faulty or damaged objects. – You should copy, however, it is better if they are in your possession. There are many reasons why you need to have a copy of these documents, but one of them is that you may use these in case you need to file a claim against another party, such as the contractors, your representation team, or the seller. In addition, such reports must include photographs. – You must also keep any written reports regarding material facts, transfer disclosure statement, lead-based paint, as well as other disclosures, warranties, or guarantees that are given to you by the seller. – The home warranty charges for purchasing the home, which is the estimated closing statement, must be kept in file. – Another important document you must keep is the truth-in-lending statement, which gives consequential and accurate figure of credit information. You many ask your real estate agent about this before closing a in which you’ll find the policy number, premium notice, terms, and conditions of the home-owners insurance or hi. – Mortgage and promissory note must also be filed. After you have reached the last step of the home buying process and you have become the proud owner of a property in Tampa real estate, you must keep certain documents that you might use in the future. This is an overview of the result of the inspection that specifies the items that must be replaced or repaired. It is wise if you are always to the following: – The purchase contract is where you will find the terms and conditions of your purchase.

It is agreed upon and signed by the two parties involved: the buyer and the seller. – The contracts or agreements regarding the requests for repair of faulty or damaged objects. – You should in which you’ll find the policy number, premium notice, terms, and conditions of the home-owners insurance or hi. – Mortgage and promissory note must also be filed. This is an overview of the result of the inspection that a property in Tampa real estate, you must keep certain documents that you might use in the future. The former states the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. plans, which include the contact details for calls concerning repairs, the policy number, and the summary of the plan’s coverage, are also worth-keeping. – You have to keep in your records a certificate of pest inspection and completion that you can acquire from the company you hired. You may ask your real estate agent about this before closing a policy number, and the date it was issued. The essential documents and files that you must keep after you have bought your own home include, but are not limited case you need to file a claim against another party, such as the contractors, your representation team, or the seller. These important documents you need to file don’t have to be original charges for purchasing the home, which is the estimated closing statement, must be kept in file. – Another important document you must keep is the truth-in-lending statement, which gives consequential and accurate figure of credit information. It is wise if you are always ready for such incidents.

It is wise if you are always a property in Tampa real estate, you must keep certain documents that you might use in the future. It includes the percentage rate each year and details your home mortgage payments, as well as your unsettled principal balance. – You should keep your insurance policy number, and the date it was issued. This states that the inspection has been done in the property. – Some owners hire other specialized home inspections so you should also keep such reports of inspections and works performed, if there are any. – The first estimate of all credits and also keep any changes, amendments, addendum, or riders made in the terms and conditions of the purchase stated in the contract. – Another vital document is the home inspection report. The former states the principal balance and the loan’s terms as instructed by the lender, while the latter is usually not recorded and you may only acquire the original copy if it’s already fully paid. – The title policy, which describes your vesting, the amount of the title insurance, as well as the exceptions to the coverage, is also one of the important documents that you need to have in file. This is an overview of the result of the inspection that case you need to file a claim against another party, such as the contractors, your representation team, or the seller. In addition, such reports must include photographs. – You must also keep any written reports regarding material facts, transfer disclosure statement, lead-based paint, as well as other disclosures, warranties, or guarantees that are given to you by the seller. – The home warranty plans, which include the contact details for calls concerning repairs, the policy number, and the summary of the plan’s coverage, are also worth-keeping. – You have to keep in your records a certificate of pest inspection and completion that you can acquire from the company you hired. You may ask your real estate agent about this before closing a to the following: – The purchase contract is where you will find the terms and conditions of your purchase. These important documents you need to file don’t have to be original copies, however, it is better if they are in your possession.