| For starters let me state the apparent. If you sold a | | | | many gurus predict we go into a period of significant |
| house or commercial property and are holding the | | | | inflation due to all the government spending, the |
| owner financed for the purchaser, you have a | | | | value of their private mortgage could decline |
| valuable asset that can be marketed. This as any | | | | significantly. (Time value of money.) |
| other financial asset has a risk and a value (value of | | | | 4. The amount of time left on the private note (or |
| the future income stream ) that you can sell to other | | | | balloon period). While this will have an effect the |
| individuals or investors. Or if you own a house you | | | | value, many note buyers like longer time periods than |
| need to sell, you can offer owner financing to get | | | | others. |
| top dollar for the home, sell the property and then | | | | 5. The quality of the credit of the borrower. Most |
| you can sell the note you are holding in a | | | | mortgage note purchasers have set minimum credit |
| simultaneous closing for an instant payoff. | | | | score levels in order to purchase a note. Furthermore, |
| Many note investors make the mortgage note | | | | these buyers will wish to to review the buyer's credit |
| purchasing process a mystery. And while not every | | | | report for mortgage history, recent bankruptcies, etc. |
| private mortgage buyer has the same requirements | | | | Mortgage note investors will usually add a 6th issue, |
| just like a stock mutual fund there are five principal | | | | the size of the purchase price. The higher the dollar |
| elements that affect the price they will pay for a | | | | exposure, the less understanding these private |
| private note. I have listed these below. | | | | investors will be on the buyer's credit, the amount of |
| These include: | | | | seasoning, etc. |
| 1. The amount of equity in the real estate as | | | | One last word about the amount of seasoning, |
| determined by on its appraised or estimated worth | | | | particularly as it relates to the sale of a mortgage |
| or sales price. The greater the , the greater the | | | | note through concurrent closings. Obviously, selling a |
| purchase price as there is a smaller amount risk for | | | | private mortgage formed from the sale of a home |
| the buyer. | | | | results in the lowest amount of monthly seasoning |
| 2. The amount of seasoning on the private note, | | | | for a note. And while this would lower the price a |
| meaning it's been around a good bit of time. In this | | | | note buyer is willing to pay, if there is a good down |
| illustration private mortgage investors are mostly | | | | payment or combination of a solid down payment |
| looking for a good payment history. These private | | | | and the home seller is willing to hold a second |
| investors want to document that the private | | | | mortgage, this type purchase can be a very nice deal |
| mortgage is being offered and the longer the time | | | | for the home seller. This is due to the home seller 1) |
| period, the better. | | | | Being able to sell the residence much sooner, 2) |
| 3. The rate of interest on the mortgage note. The | | | | Usually fetching top dollar for the house and 3) Not |
| higher the rate or spread as compared to a | | | | having to pay real estate sales person's fees. |
| benchmark such as the ten year treasury, the | | | | So that's it, private note or mortgage selling exposed. |
| greater the price offered. Private note holders should | | | | I hope this article was of benefit. |
| be keenly aware of this factor for their asset. If, as | | | | |