Imagine a situation where you sell a home and basically agree to finance the mortgage via owner financing. Traditionally, somebody who was interested in purchasing a home would obtain financing from a bank or some other lending institution. However, there are instances where the owner of a home may decide to provide financing by essentially holding the deed and structuring monthly payments from the perspective home buyer.
When you stop and think about this arrangement, it can be very beneficial to the buyer. Why? If they are unable to qualify for traditional financing through a bank or other lender, owner financing likely represents the only viable option that will allow them to one day own the home they are interested in. The challenge that this creates for the home seller -- who is basically the mortgage note holder that will retain the deed while incremental payments are made every month by the prospective home buyer -- is that no lump sum payment is forthcoming. In other words, the individual who currently owns the home will not be receiving a lump sum check for the asking price. This can be a bit confusing, but if you re-read what we just talked about it will make more sense.
An entire cottage industry of mortgage note buyers has developed to help people who are involved with an owner financed mortgage note free up cash flow by providing a lump sum payment in exchange for the mortgage note. Lets take a moment to clarify some terminology. You will sometimes see people refer to a mortgage note as a promissory note. A mortgage note buyer can also sometimes be referred to as a promissory note buyer. That said, a homeowner can sell a mortgage note to a mortgage note buyer to get a lump-sum cash distribution instead of having to wait for all of the incremental monthly payments to be made over time by the individual to whom owner financing is being provided
Needless to say, figuring out how to sell a mortgage note can sometimes be a little bit confusing given the fact that a typical homeowner will not really be engaging in this practice very often. That's why it makes sense to work with a professional who can help guide you through the entire process. It's great that you're doing some independent research on the Internet to learn more about this particular topic. You should definitely continue reading more about this subject and not be afraid to spend a couple of dollars here and there to further your understanding of this process so that you can ultimately score a big payday when you sell a mortgage note that you're currently holding.
by: Wayne Holt
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The author of this article is mortgage note buyer. The author has written many articles on mortgage note buyer too.