Private mortgage notes are created through the owner financed sale of real estate. If you sold- or are considering the sale of your property with owner financing, you left the closing (title office), not with a check, but with a pile of paper, including a promise from your buyer to pay you in installments over a period of many years. That promise might be called a private mortgage note, a deed of trust, land contract, promissory note, real estate contract or contract for deed, but even though there are important differences among them, they all mean waiting- a very long time- for your money.
Waiting may not have been a problem at the time you sold. In fact, owning a private mortgage can give you a steady stream of monthly payments at a reasonable interest rate (you need to charge 8-9% to keep up with inflation) But now you need a chunk of cash, not a trickle of payments.
Your note is a valuable financial instrument and, like stocks and bonds, has a cash value. In fact, depending on your specific needs, it can be sold in increments, netting you more cash- more quickly- than the note’s current principal balance.
The Cash flow industry has Note Buyers for just about any contract or note that exists, but its largest category by far is real estate notes. Although there is no accurate way to measure their numbers or value industry experts agree that privately-held real estate notes number in the millions with a total value in the tens of billions of dollars. And because they are backed by real estate, mortgage notes remain very attractive to investors, both private and public, who together have untold billions to buy them at every opportunity.
How does this affect YOU?
in a word “liquidity” While it is true that you Can’t walk into a bank or call a brokerage house to redeem your private mortgage note for cash, you can have a lump sum payment in your hands in a matter of a few short weeks. At Note Freedom Services we have huge appetite for “Quality” real estate notes, mortgage Note Freedom Sercices has become the industry’s creative real estate financing experts, buying mortgage notes in a variety of flexible and innovative ways. in fact, we Can work with notes:
- At any interest rate
- for any term
- with no payment history (“seasoning”)
- up to 100 percent financing
- simultaneous with the sale of the property
- without checking the Payor’s credit
- Currently in arrears or even in default!
How do we Determine Your Notes Value?
You may believe that your note can be sold for a lump sum payment equal to its current principal balance. With help from Note Freedom Services, you may be able receive face (“par”) value for your note, but par value purchases are rare.
Most private and institutional investors buying mortgage notes professionally value notes according to the long term “yield”, or the return they require on each dollar invested. We call this the “Time Value of Money” which means my dollar today is worth more than your dollar tomorrow.
Note Freedom Services determine the note yield and value according to the:
- Security for the note (the property characteristics and value)
- Note’s current principal relative to the property value (Loan to Value Ratio, or LTV)
- Note’s Interest rate
- Length (term) of the note
- Payment schedule
- Credit worthiness of the payor
- Payor’s equity in the property
In addition, we may adjust the yield to account for other terms of the note that may affect its value, For example, if you offered your buyer an adjustable rate, interest-only payments, or a discount for paying the note early, We would adjust our yield- and your discount- to compensate.
Selling Your Private Mortgage Note: Step-By-Step
- Gather all the facts about your note: Deed of Trust, Promissory Note, Title insurance policy, Insurance, closing statement and Payment history.
- Contact Note Freedom Services: We will review the information above and give you a “Written Fair Market offer” within 24 hours.
- Purchase Contract: Once our offer is accepted we will send over a purchase contract and then open up escrow with your current title company.
- Assignment: You will assign to us the contract and we will wire the Cash to the closing agent.
- Note Freedom Services will pay all costs.
Submit your Mortgage note by using the online form below:
Requesting a free note analysis is easy!
Step #1 – Complete the Online Worksheet
Click Here to Complete the Online Worksheet and the information will be sent electronically to our email inbox.
