What Does a Mortgage Note Buyer Look For in a Loan?

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August

16

Seller financing has been around for years, and has been a creative financing option that allows buyers and sellers to come to a financing agreement without the need for bank financing. In recent years with the downturn of the economy and tighter bank lending parameters, seller financing has become even more prevalent. However, while many sellers are agreeable to structure such financing to get the property sold, very few sellers want to service the loan and accept small monthly payments for the entire life of the loan. Instead, many sellers will sell the note they are holding a mortgage note buyer, who in turn will give them a lump sum cash amount.

When you approach a mortgage note buyer, there are certain factors that the company will consider with regards to the loan you are holding. The buyer will not make an offer for 100% of the face value of the loan, but instead will make an offer lower than face value that takes into a variety of factors. They will consider basic criteria such as the credit history of the debtor, the amount of the loan, and the interest rate. They will also look at other factors such as the method of compounding interest, nonpayment consequences, foreclosure methods dictated in the note, and so forth.

After you get a cash offer from a mortgage note buyer, you will need to then make the decision to proceed with executing the cash offer and signing the loan over to them. If you do, you will enjoy the stress-free lifestyle of not having to worry about collecting monthly payments on the loan each month. Your other choice is to continue collecting the payments and servicing the loan for the life of the loan, which may involve additional costs to you if the debtor defaults on the loan at some point.

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