1. Q: Why would someone offer owner financing instead of letting the bank finance the mortgage?
A: Not all owners are able to offer owner financing because they don’t have enough equity in their home. But for those who do, it can be a good source of residual income yielding a respectable rate of return perhaps 2 or 3 points over prime. Offering owner-financing can also bring a higher sale price, as well as result in a quicker sale and closing.
2. Q: Why would someone then want to sell their mortgage note?
A: The situation may have changed from when it was originally sold, or perhaps they need a lump-sum of cash for any number of purposes.
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3. Q: What if I want to sell my real estate by offering owner financing, but I also need to pay off the remaining mortgage that I owe? How do I get the funds to do that?
A: At closing you will have the down payment from the buyer, less any closing costs (such as appraisal fee, title work, and realtor’s commission, if applicable). This money can be applied toward loan pay-off. By also structuring a Simultaneous Close, you can sell part of your newly originated mortgage to a funding source for immediate cash to make up the shortfall, plus any additional amount of cash you need or want. |
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4. Q: Is selling my mortgage note legal?
A: Absolutely. Mortgage notes have been sold for many years. The fact that you originate it makes it attractive to many funding sources who aggressively buy privately held mortgage notes. We will help you find the funding source that will pay you top dollar for your note.
5. Q: What does it cost me to sell my mortgage note?
A: Assuming you have a note that a funding source would want to buy, the only cost would be to provide a current appraisal and title insurance. Most other costs, including legal fees, can be negotiated with the funding source.
6. Q: How long does it take to sell my mortgage note and get cash for it?
A: The process is very simple once all the required documents have been collected, signed and submitted. Normally this takes two – three weeks. When closing, the funding source will provide your lump-sum through the title company, per your previous agreement with them |
7. Q: Do I need to involve my attorney or CPA?
A: Yes, that would always be recommended when dealing with financial and legal matters. We encourage you to discuss it with anyone you feel comfortable depending on for advice. We would welcome the chance to share the benefits of owner financing with others.
8. Q: Can I just sell some of my note?
A: Absolutely! This is actually the preferred way because it provides the most cash for the fewest payments purchased. This is referred to as a Partial sale. When you say how much the lump-sum is that you want to receive, we’ll tell you how many payments you will need to sell to receive that amount. Alternatively, you could decide to split the monthly payments, getting a lump-sum of cash up front, while continuing to receive a portion of each monthly payment for each of the remaining payments that you partially sold. 9. Q: What happens if I sold my note and the original buyer defaults?
A: Since this is not a loan, the funding source assumes all the risk for the note (or that portion) they purchased. |
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