5. Take calls, have house showings, and position the owner-financing terms you’ve settled on.
6. Get interested buyers to complete an FNMA Form 1003 Uniform Residential Loan Application which provides authorization to release credit information.  Fax it to us, to confirm that the buyer has sufficiently good credit for our mortgage note buyers.  They are usually more lenient than traditional bank financers.

7. Based on the buyer’s financial condition and the proposed terms of the note, we will work with a funding source who will make a firm purchase offer for the note as proposed.
8. Buyer and Seller sign a Real Estate Purchase Contract and Expedited Capital Funding will provide you, the seller, with a contract to purchase that note at, or right after, closing. 
9. You choose the title company or closing agent, and we take it from there.
10.  At the closing the seller sells or more properly “assigns” the mortgage note to our investor, who wires funds as agreed previously.  All closing costs are paid, and the buyer starts making payments directly to that investor.

Structure your private mortgage to your advantage

• Require a high interest rate on your loan.  The eventual purchaser of your note will give you higher value for notes returning higher interest.  As a private individual offering financing, you can request whatever interest rate the buyer is willing to pay.  The buyer typically does not qualify for mortgage company rates, so they should expect to pay a higher rate since you are bearing the risk.
• Obtain at least a 10% down payment, or Loan to Value (LTV) < 90%.  A larger down payment is obviously better, as it provides greater assurance against the possibility of a later default, as well as providing a cash buffer against foreclosure costs. 
• Try to have a short amortization period.  Although selling a note that has a 30 year term is possible, you will not get as much cash today for longer term notes due to the time value of money.
• Include a 5 or 7 year balloon in the terms of the note, assuming the buyer is willing.  The investors then get their money long before they would if the note were fully amortized, hence making the note more valuable.  This should also be agreeable to many buyers, who should expect to clean up any credit or employment problems they may have had, so that they will qualify with a conventional mortgage company when refinancing in a few years.

Protect yourself with a contingency clause
Once you have a potential buyer, and are negotiating terms of your sale, write a contingency clause into the contract to protect you in case a purchaser of your note cannot be found that offers you the purchase terms you require.  Simply stated, if the seller of the property cannot find an acceptable offer for the note and mortgage, then the sale of the real estate will not go through.  By the time the seller gets to the real estate closing, the due diligence required by the note buyer will have been done and there will be no reason for the mortgage closing to not go through.  At the closing, the seller will then be able to waive the contingency clause.

Have your contract with the buyer contain a “Due on Sale” clause
This gives assurance to your note purchaser that if your buyer later sells the property, the note purchaser will be paid off.  You would probably want this as well if you decided to continue holding your private mortgage.

Require a full appraisal in the contract
This will provide more detail on the real estate property, giving the potential note buyer a more accurate value of the real estate that secures the note.

Require the buyer to complete a credit application (FNMA Form 1003)
This will provide you, the seller, with a better assessment of the buyer’s creditworthiness, which will also be of interest to your potential note purchaser.

Retain the knowledge and expertise of professionals in the Real Estate industry
Expedited Capital Funding, LLC, is not a licensed real estate broker, and our services cannot substitute for the knowledge and expertise they offer or that is provided by a real estate attorney.  We can help sell your note once you create it.  If you are not already working with a real estate attorney and are interested in the benefits you can gain by selling your home with private financing, we encourage you to retain their services.

Ideally, buyer and seller propose terms first, before finalizing the actual purchase contract
This will allow the funding source to provide a quote, which the seller can use to decide if it is high enough.  If not, then alternative terms might be considered that are agreeable to both buyer and seller, which provide a greater value to the seller.  

Be flexible in how much money you need from the note investor
The most a note investor, or purchaser, will provide in cash is 75% of the value, meaning the Investment to Value (ITV) ratio is < 75%.  If the loan to value (LTV, after down payment) is greater than 75%, this difference is best made up by only selling some, but not all, of the future payments to the note investor.  Therefore you will continue to retain some ownership of the note and can expect to receive some of the future payments.  Alternatively, you can split payments, whereby the note purchaser splits your buyer’s monthly mortgage payments between you and them.