We know you may have
several questions; we have amassed a list of “Frequently
Asked Questions” for you to review.
If your question was not
addressed here please contact
us and we will address your inquiry.
Also we will give you a free
quote on request. This quote is absolutely FREE!
Why should I
sell my mortgage note?
What
other reasons are common?
Will I
incur any "out-of-pocket" expenses?
When I
convert my note to cash, how will it affect the person(s) paying me?
How long
will it take to receive my money?
Will I
need to attend the closing?
How will I
be paid?
Will you
buy second or third mortgages?
My
mortgage has a balloon payment at the end of the term. Is that OK?
Do you
buy interest-only mortgage notes?
Will you buy
a new mortgage, or does my note need to be "seasoned"?
Do you buy
notes from any state?
Can I sell a
portion of my mortgage note?
Do you
limit the size of the notes you buy?
Let's say
that I'm holding a mortgage with a balance of $25,000. Will you pay me
the entire $25,000?
Why should I
sell my mortgage note for less than the balance?
Why should I sell my mortgage
note?
Usually, a promissory
note is acquired in lieu 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!
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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.
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Will I incur any "out-of-pocket"
expenses?
Ordinarily not.
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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.
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How long will it take to receive my
money?
Generally, from three to
four weeks. Payment is made at closing, when all documents have been
signed and recorded.
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Will I need to attend the closing?
No. You will receive a
closing package along with easy to follow instructions.
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How will I be paid?
Your payment will be
made by certified check.
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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 23% the size of the first. If the
LTV is right, we'll buy it.
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My mortgage has a balloon payment
at the end of the term. Is that OK?
Yes! We buy balloons,
too.
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Do you buy interest-only mortgage
notes?
Yes!
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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.
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Do you buy notes from any state?
Yes!
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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, f
or example, sell just the next 60 payments for the amount needed. After
five years, the payments would revert back to you.
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Do you limit the size of the
notes you buy?
No. Any size is OK if
the Loan to Value is favorable.
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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.
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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 note you are receiving payments on is
$25,000, at a 10% interest rate, with ten years of $330.38 monthly
payments. 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.
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