Get Cash for Structured Settlements and Annuities
   Call 1-503-643-9743 Home About National Funding Resource Associates Contact Us Examples of People We've Helped

Call Today
1-503-643-9743
Notice: These articles are provided "as is." National funding Resources cannot edit or change the information provided.
Get More Information

First Name:

Last Name:

Phone Number :

Email:

Enter the code as it is shown:

Your privacy is very important to us. We will not sell your information.

Note Basics 101- Selling Your Mortgage Note

by Frederick B Webb Jr.

A basic understanding of what note investors look for when buying notes.

The first thing you want to understand are the basic categories of mortgage notes.

They are: Residential, Mobile Home, Commercial and Vacant Land notes.

Recognize that in certain parts of the country they are referred to using slightly different terms but nonetheless, they can all be categorized as one of the above mentioned.

Residential Notes

are notes created from the sale of residential properties, like: Houses, Condominiums, Townhomes and 1-4 family unit buildings.

Mobile Home Notes

are promissory notes secured by a mobile home and the land it is on.

Commercial Notes

are notes originating with the sale of any type of commercial business property, like: offices, apartments, industrial properties and warehouses.

Vacant Land Notes

are notes on developed or undeveloped land, or land not designated as a specific use property such as:

farm land, waste storage, does not include land that has been improved for development and building.

Now that weve covered the types of notes there are, lets keep it simple and move on...

The next set of basics we need to cover are:

*What determines the value of your note?*

Knowing the factors that determine the value of your note will save you a lot of time when it comes down to entertaining the offers youll receive from note investors.

*What payout options fit your situation?*

Not everyone needs to cash in their total note, so depending on your situation, you may find that you wish to structure a purchase with options.

Note Basics 101:

What determines the value of your note?

Type of property securing the note:

The more secure the collateral, the more valuable the note.

Owner-occupied, single family residences are more secure than rental property, because the payor is less likely to default on payments and risk losing the roof over his/her head.

Unimproved land is risky, although some of the investors in our network do specialize in this area.

The owner has paid less for it, and it is draining cash in the form of property taxes and other expenses.

The owner of an unimproved lot may decide it is cheaper and easier to default on payments and lose the lot than it is to sell it.

Down Payment amount:

Consider percentage of sale price as well as actual dollar amount. The more the buyer has invested in the property in the form of a down payment, the less likely he/she is to "walk".

Terms of the note:

A shorter amortization (term) on a note also will bring a higher bid from a private mortgage buyer.

Shorter term notes have higher monthly payments, and higher monthly payments generate higher bids.

Payment history of the note:

Payment history is a good indicator that payor is credit worthy.

Timeliness of Payments:

Reliability is also a good indicator that payor is a good risk for an investor.

Equity:

The more cash the payor has invested in the property, the less likely he/she will be to default on payments.

Position of note:

1st, 2nd, or 3rd position note. Its a rare find to get an investor willing to take a third position note seriously.

Interest rate on the note:

The higher the interest rate, the more the investors will offer for the note.

The ideal situation is when your notes interest rate is 10% or higher.

Location of property:

If the property is in a good location, it will be more saleable in the event the payor "walks".

Owner of the property:

The investors will consider the payors credit history in general as well as the payment history on the note.

*Additionally,

Investor quotes will also be contingent on:

Satisfactory credit of the payor (based on analysis of personal credit history from credit reporting agency) Verification that the property currently appraises at or above its stated value (based on drive-by appraisal) Verification that the title is free of defects (via updated mortgagees title policy) =======================================

The next thing that needs to be understood is the way purchases can structured and how they affect the payout options.

Below you will find the typical payout options:

Full Purchase Option - The investor buys the entire note. This alleviates the seller of the responsibility to collect payments in the future and to be completely done with the note all at once.

Straight Partial - The investor purchases a predetermined number of payments in order to meet the sellers cash requirements.

After the last payment of that predetermined term ends, the balance on the note reverts back to the seller.

Reverse Partial - The seller receives a lump sum and continues to receive the full payment amount for a specified period of time.

This solution is appropriate when the seller needs a large amount of cash at closing but also wants to receive the monthly payments for a while.

Split Payment - The investor purchases half of the sellers monthly payment; the seller continues to receive the income from the other half.

Balloon Only - The investor purchases only the balloon due at the predetermined date on the promissory note.

This alternative works in situations where the seller needs some cash at closing but doesnt want to wait 30 years to collect the balance.

Once again. Its that simple.

Now all you need are the forms to submit your note information to a note investor and Direct Access to the note investors waiting to buy them.

Where to go from here...

In addition to understanding these simple basics, you now need to decide whether you wish to use the services of a broker or whether youd rather handle it yourself.

Up until now, I would have always recommended a broker.

Brokers are in the know as it relates to "who" is buying notes and paying fair prices for them.

Also, brokers can submit your notes to these buying parties on your behalf.....saving you time.

Knowing what I know today about how people get ripped off by brokers, I no longer recommend going this route.

That kind of things brings notoriety on the profession.

Please dont misunderstand, not all brokers are bad. I have published an article called Picking The Right Broker, you can access it at: www.mortgagenotecash.com/TheRightBroker.htm =======================================

Now that you know what factors determine the value of your note and what the typical payout options are, I strongly recommend selling your note yourself....

because, even though using a broker saves you time, it does not save you money......nor is it supposed to.

We have created what we call the Direct Access Directory and it gives you the same contact information brokers use to place your note with a new buyer.

Why not find and pick your own buyer? Itll save you thousands on fees you would otherwise have never seen.

So, if you are ready to save hundreds or even thousands of dollars bypassing note broker fees and dealing with the actual note investors directly, you need to get your copy of our Direct Access Directory.

For more information about the directory, go to: www.mortgagenotecash.com/directaccess.htm


Frederick Webb is a Certified Cash Flow Consultant and is President of Webb Funding Group, a small debt brokerage firm he runs with his wife, Kashita Webb.

For more information, visit their site: www.mortgagenotecash.com


Need Cash?
Call now and get your free analysis.
1-503-643-9743

NFRA has many funding sources and can assist in finding the right one for you! For free analysis, call 24 hours a day at 1-503-643-9743 or Click here for the online conact form.


Featured Articles
5 MISTAKES People Make When Selling Structured Settlements for Cash Mistake 1: Agreeing to sell to the highest bidder. Unfortunately, some brokers or structured settlement/annuity sources will make a high offer just to get someone under contract. Then they will start making excuses and reduce the offer. Once you are under contract with a funding source, it is very difficult to back out. Even if you are able to pull out, you will have to start the whole process over again losing valuable time. Cash Now for Your Business Note People are interested in selling business notes for several reasons. Usually, the prospective seller has decided that he would rather receive the lump sum value of the business, rather than monthly payments. Often that's because he wants to invest in a new business. Other times, the prospective seller has an incentive such as an expensive wedding bill, college tuition or a retirement trip. Factoring Invoices - How to Get Off The Cash Flow Merry-Go-Round All businesses want to be successful and to be successful you must have sufficient cash flow. Are you tired of your unpredictable cash flow cycle? Is the ritual of making incoming cash receipts stretch to cover short-term obligations frustrating your business and making you dizzy? Cash Now for Your Real Estate Contract The private mortgage industry is a relatively young business with roots that can be traced directly to the emergence of seller-backed, or owner, financing. Prior to the very high interest rates of the late 70s and 80s, seller-backed financing was not a common financing option. The only loan option for most real estate buyers was through a bank or savings and loan institution. But with interest rates topping out at 22 percent, financing for real estate was either unavailable or too unattractive for most buyers. Real estate sales plummeted.

Other Related Articles

Cash For Structured Settlements - The Smart Way For most people when they buy a house it is considered their life’s largest deal. In some cases of structured settlements the compensation and financial considerations for a persons life duration and the total present value of the settlement can reach few millions of dollars. Therefore it is strongly advised to use professional services like annuity consultant and a lawyer specialized in this field in order for you to avoid painful costly mistakes. Here are some tips: Factoring. Cash Without Borrowing Cash flow is one of the main reasons businesses fail. At one time or another, every business, even successful ones, have experienced poor cash flow. Cash flow does not have to be a problem any more. Do not be fooled -- banks are not the only places you can get funding. Other solutions are available and you do not have to borrow. Factoring Can Be An Ideal Solution For Start-Up and/Or Growing Businesses Factoring is one of the oldest methods of business financing in existence. The history of factoring dates back to the days of moneylenders in the middle ages. Factoring has been the working capital facility of choice in Europe for centuries. It has taken on a new life in recent years as a financing method for many businesses in the United States. Factoring Fundamentals - Vendor Financing Factoring is an efficient and reliable way of meeting capital needs of the business. It is beneficial when a business promises to have definite profits in future but faces capital deficit to get the project completed. Factoring Services Many businesses have heard about banks and private companies that offer factoring services to assist businesses in paying accounts receivables until the actual bill is paid, however many businesses are still concerned about the actual facts regarding factoring. Questions that most businesses want to know is how much money do factoring firms provide private businesses, are fees high for factoring services, how long it takes to become approved for factoring, what benefits does a company receive if it uses factoring services as well as a whole host of other questions. However, there are no definite answers to these questions about factoring because each business receives a personalized quote depending on the business circumstances. However, there are some general answers that will help you understand factoring a little more.

More Articles


HomeContact UsAbout UsExamplesArticles

© nfra.us, All Rights Reserved

National Funding Resource Associates
2850 SW Cedar Hills Blvd, #325 | OR | 97005 | USA
Phone: 503-643-9743 | Fax: 503-671-9381