Note Selling FAQ's
Why should I sell my mortgage note?
Usually, a promissory note is acquired instead of the cash desired during a real estate transaction. If retained long enough, many notes will eventually pay off. However, late payments, insurance liabilities, tax problems and foreclosure may soon plague some mortgage note holders. Even when these problems do not arise, many people would really prefer to have their cash now!
What other reasons are common?
Other reasons include: to pay off high-interest debts, to invest in a business, real estate or stocks, to pay tuition, to remodel a home, to buy a new car or boat, to settle an estate or to provide for relatives unable to service the mortgage. Some people didn't want to carry back the note in the first place, or have grown tired of collecting the monthly payments.
Let's say that I'm holding a mortgage with a balance of $25,000.
Will you pay
me the entire $25,000?
The value of money decreases over time: a $100 bill will buy less in ten years than it would today. Because of this, the amount paid will be less than the current balance. The amount depends on the interest rate you charged the buyer, the term of the mortgage, the current prime rate, the value of the property, as well as other factors.
Why should I sell my mortgage note for less than the balance?
Simple: The earning power of the decreasing mortgage balance is considerably lower than the earning power of a fixed sum invested at interest. For example, assume that the current balance of the mortgage you are receiving payments on is $25,000, at a 10% interest rate, with ten years of $330.38 monthly payments remaining. The total value to you if you were to receive all ten years of future payments is $39,645.60 (120 months times $330.38). However, if you accepted $22,000 today, and invested that amount in a 9% government bond (or other insured investment), the "simple" interest earned would be $165 per month. Ten years of interest would bring you $19,800, without touching your original $22,000 principal. Adding those up, the total value of your investment would be $41,800, which exceeds the $39,645.60 you would have collected from the monthly payments! Furthermore, if you sell, you have a guaranteed income when you invest in insured, fixed rate investments. A mortgage note is only a promise of future payments that may, or may not, appear. [P.S. When a note is paid off, there's no more income. If, however, you exercise the cash now option, your principal and interest could remain with you forever!]
Will I incur any "out-of-pocket" expenses?
Ordinarily not.
When I convert my note to cash, how will it affect the person(s) paying me?
It will not. All the terms and conditions set forth in the original note and mortgage remain in force. The only change will be to whom and where future payments are sent.
How long will it take to receive my money?
Generally, two to three weeks. Payment is made at closing, when all documents have been signed and recorded.
Will I need to attend the closing?
No. Our office will close the transaction by sending you a closing package along with easy to follow instructions. Just go to www.heritagenotebuyers.com. We can do all transactions through the mail with Overnight and Priority Mail Speed!!
How will I be paid?
Your payment will be made by certified check from a major financial institution.
What is a Simultaneous Closing?
Simultaneous closings can benefit the buyer and seller. This works great when a seller has the opportunity to sell a property with owner financing since his/her buyer is not able to secure bank financing. You will be able to get the full appraised value as the sales price, which you would not normally get if your buyer could qualify for bank financing. We would then purchase this note from you at a price that you would normally have sold it for in the first place. You can close on the sale of the property and at the same closing (simultaneously) we will purchase the note from you. You leave the closing table with all your cash and your seller would make all payments to us.
As an example, let's say you have a property that appraises for $100,000 that you would sell for $80,000 if a cash buyer came along. You can sell the property with an owner financed note for the full $100,000 and at closing we would normally be able to pay you in the range of $80,000 at the simultaneous close as described above. Your buyer would buy the property with a note to you that we would buy from you at the same closing.
Will you buy second or third mortgages?
Yes. The position of the mortgage is not as important as the "loan-to-value" (LTV) ratio. A second or third should be at least 25% the size of the first. If the LTV is right, we'll buy it.
My mortgage has a balloon payment at the end of the term. Is that OK?
Yes! We buy balloons, too.
Do you buy interest-only mortgage notes?
Yes!
Will you buy a new mortgage, or does my note need to be "seasoned"?
Yes, we buy new mortgages. (A seasoned mortgage is one that has been partially paid down, giving a history of how payments have been made.)
Do you buy notes from any state?
Yes!
Can I sell a portion of my mortgage note?
Yes. In some cases, you may require only a specific amount of cash to make a purchase, handle an emergency, pay off a loan, etc. If you had 200 payments remaining, you could, for example, sell just the next 60 payments for the amount needed. After five years, the payments would revert back to you.
Do you limit the size of the notes you buy?
No. Any size is OK if the "Loan to Value" (LTV) is favorable.
What can I expect when I call or correspond with your office?
We treat every client with the respect and fairness that we expect to receive ourselves. We ensure that all parties involved are happy!
Sell your private real estate notes or cash flow notes today, and get the cash you need now.
