Should You Sell a Mortgage Note?

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If you are holding a seller-financed note, you may be in a position that you never really planned on being in. So many people put their real estate property on the market and expect to eventually walk away from the closing table with cash in hand. Yet the fact is that many sellers find they must carry an owner-financed note for the buyer to make the deal work and to actually sell the property. If you are now holding such a note, you may be debating between deciding whether to sell a mortgage note or keep holding on to it.

This is a fairly big decision, and one that you should not make lightly. It is important to weigh the pros and cons. When you hang on to such a note, you will find that you have to service this note, which requires you to keep up with payments the payee makes, monitor and track the pay down of the principal of the loan and more. There is also a risk that the payee could default, which could put you in the position of paying legal fees and possibly even lose money.

There are some benefits of selling your note to consider. When you sell a mortgage note, you will be able to exchange your note for cold, hard cash, and you can use this cash in a variety of ways. You will lose a small amount of money when you sell a mortgage note because you will not get face value for the note. However, you can take your cash and invest it in a less risky investment vehicle like a mutual fund, a CD or another similar investment. You can also use your cash for other purposes such as paying off debts, renovating your home and more. You will need to decide for yourself whether to sell or hang on to your note, but these are considerations to keep in mind as you make your decision.

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