Should You Accept A Full Purchase Offer For Your Note or Not?

Written by Frederick B Webb Jr.

Should You Accept a Full Purchase Offer or Not? ======================================= You could be facing a dilemma when considering payout options on selling your mortgage note!

 To accept a full purchase offer or a partial purchase offer is not always an easy decision.

Sure, to takerepparttar full purchase option is an easy decision to make if you're holding a second position note on a property that doesn't have any equity after you addrepparttar 148618 first and second mortgages, but what if that's not your situation?

 Full purchase payouts can be good if your primary concern is to just get out ofrepparttar 148619 note and be done with it.

But if getting top dollar for your note is your main concern, a full purchase sale may not berepparttar 148620 thing to do.   Before I get too far into this, perhaps you,repparttar 148621 reader, would be better served by a brief revisiting ofrepparttar 148622 different payout options and what they entail. Agreed?

 The 5 most common ways note purchase transactions are structured:

1. Full Purchase. This is when a note investor buysrepparttar 148623 entire note. The note seller is no longer responsible for collecting payments and is 100% free of ownership of and responsibility forrepparttar 148624 note.

 2. Straight Partial. Here, a note investor purchases a predetermined number of payments in order to meetrepparttar 148625 seller's cash requirements. Afterrepparttar 148626 last ofrepparttar 148627 predetermined payments,repparttar 148628 balance onrepparttar 148629 note reverts back torepparttar 148630 seller.

 3. Reverse Partial. The seller, in this scenario, gets a lump sum and continues to receiverepparttar 148631 full payment amount for a specified and agreed upon period of time.

This kind of arrangement is most fitting whenrepparttar 148632 seller needs a large amount of cash atrepparttar 148633 closing but still wants to receiverepparttar 148634 monthly payments for a while.

Note Basics 101- Selling Your Mortgage Note

Written by Frederick B Webb Jr.

A basic understanding of what note investors look for when buying notes.

The first thing you want to understand arerepparttar basic categories of mortgage notes.

They are: Residential, Mobile Home, Commercial and Vacant Land notes.

Recognize that in certain parts ofrepparttar 148617 country they are referred to using slightly different terms but nonetheless, they can all be categorized as one ofrepparttar 148618 above mentioned.

Residential Notes

are notes created fromrepparttar 148619 sale of residential properties, like: Houses, Condominiums, Townhomes and 1-4 family unit buildings.

Mobile Home Notes

are promissory notes secured by a mobile home andrepparttar 148620 land it is on.

Commercial Notes

are notes originating withrepparttar 148621 sale of any type of commercial business property, like: offices, apartments, industrial properties and warehouses.

Vacant Land Notes

are notes on developed or undeveloped land, or land not designated as a specific use property such as:

farm land, waste storage, does not include land that has been improved for development and building.

Now that we've coveredrepparttar 148622 types of notes there are, let's keep it simple and move on...

The next set of basics we need to cover are:

*What determinesrepparttar 148623 value of your note?*

Knowingrepparttar 148624 factors that determinerepparttar 148625 value of your note will save you a lot of time when it comes down to entertainingrepparttar 148626 offers you'll receive from note investors.

*What payout options fit your situation?*

Not everyone needs to cash in their total note, so depending on your situation, you may find that you wish to structure a purchase with options.

Note Basics 101:

What determinesrepparttar 148627 value of your note?

Type of property securingrepparttar 148628 note:

The more securerepparttar 148629 collateral,repparttar 148630 more valuablerepparttar 148631 note.

Owner-occupied, single family residences are more secure than rental property, becauserepparttar 148632 payor is less likely to default on payments and risk losingrepparttar 148633 roof over his/her head.

Unimproved land is risky, although some ofrepparttar 148634 investors in our network do specialize in this area.

The owner has paid less for it, and it is draining cash inrepparttar 148635 form of property taxes and other expenses.

The owner of an unimproved lot may decide it is cheaper and easier to default on payments and loserepparttar 148636 lot than it is to sell it.

Down Payment amount:

Consider percentage of sale price as well as actual dollar amount. The morerepparttar 148637 buyer has invested inrepparttar 148638 property inrepparttar 148639 form of a down payment,repparttar 148640 less likely he/she is to "walk".

Terms ofrepparttar 148641 note:

A shorter amortization (term) on a note also will bring a higher bid from a private mortgage buyer.

Shorter term notes have higher monthly payments, and higher monthly payments generate higher bids.

Payment history ofrepparttar 148642 note:

Payment history is a good indicator that payor is credit worthy.

Timeliness of Payments:

Reliability is also a good indicator that payor is a good risk for an investor.


The more cashrepparttar 148643 payor has invested inrepparttar 148644 property,repparttar 148645 less likely he/she will be to default on payments.

Position of note:

1st, 2nd, or 3rd position note. It's a rare find to get an investor willing to take a third position note seriously.

Interest rate onrepparttar 148646 note:

The higherrepparttar 148647 interest rate,repparttar 148648 morerepparttar 148649 investors will offer forrepparttar 148650 note.

The ideal situation is when your note's interest rate is 10% or higher.

Location of property:

Ifrepparttar 148651 property is in a good location, it will be more saleable inrepparttar 148652 eventrepparttar 148653 payor "walks".

Owner ofrepparttar 148654 property:

The investors will considerrepparttar 148655 payor's credit history in general as well asrepparttar 148656 payment history onrepparttar 148657 note.

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