Private Mortgage Notes
A privately held mortgage note (or "private mortgage note") is a debt instrument created when a property seller, not a bank, finances the sale of real estate. To put it more simply, it's a promissory note a buyer gives a seller in exchange for a piece of property. This income stream results from an owner-financed real estate sale. An individual collecting income from a private mortgage note can sell all or a portion of the future payments through a cash flow broker. The mortgage note buyer then collects the mortgage payments over time for a long-term yield.
A private mortgage note serves as the legal and negotiable evidence of a debt and the buyer's written promise to repay the seller over time. It states the rate of interest for the sale, the repayment schedule, and other terms that are associated with the debt and its repayment.
At the same time, many people find themselves locked into receiving monthly payments from notes and land contracts, which they find a burden. In many cases, the monthly payments are simply too small to make a significant difference. Often times, a lump sum of cash is needed to meet an emergency, for educational goals, or to make a lucrative investment. Many people have been extremely disappointed to find that when they needed money tied up in a mortgage note or land contract, they were unable to access it.
Let us help you liquidate your notes and get the cash you need today! To receive a free quote on your payments please visit our Note Purchase Work Sheet. Fill out the information requested and we will have a quote back to you soon. Or, should you want to talk to us personally, you may call us at 708-596-0101.
The development of owner financing resulted in hundreds of thousands of individuals holding private mortgage notes. Many of those individuals needed a way to sell them for cash. Investors saw these notes as a new investment opportunity.
Naturally, the first mortgage note buyers were primarily real estate professionals. At that time, the prevailing theory of buying real estate was the 10-10
-10 Rule: Buy with 10 percent down, a 10 percent interest rate, at 10 percent below market value, When real estate professionals started buying notes, the notion of the "discount" stuck. They were buying mortgage notes at a discount in exchange for the right to receive payments over lime. These "discount" transactions grew more and more common, and the "discount mortgage business" was born.
More recently, serious private mortgage professionals have shifted the focus of the discount mortgage business away from discounting note balances to valuing future payments based on a calculated rate of return. Investors now employ more flexible, creative techniques for structuring transactions, so that all parties benefit. Reflecting this shift in focus, the name of the industry has evolved from the "discount mortgage business" into the "private mortgage business."
THE ADVANTAGES OF OWNER FINANCINGToday, owner financing has become an established and accepted practice in real estate. In fact, owner financing offers significant advantages to both buyers and sellers. In an owner-financed sale:
Once we receive completed documentation, it will take approximately 3 weeks to purchase an owner financed note. After receipt of documentation, a credit investigation is conducted, a spot appraisal (sometimes a full appraisal) is made. Once this information is received, the cash for the purchase of the note is forwarded along with a letter of instructions to the title insurance company. The title insurance company issues its mortgages in favor of Alternative Funding Connection and disburses the cash to the seller at that time.
Our professional Staff and underwriters make closing convenient, simple and secure. After we agree on a full or partial sale of your note via our sale agreement, Alternative Funding Connections will do all the work, including notifying the payor of your mortgage assignment after closing. We utilize a title company or attorney to be certain your mortgagee is properly assigned. Alternative Funding Connections will wire funds to your local title company any or closing agent.
If you sold a property and had to take back some of the financing, we will buy that note. Although most notes created are on residential homes, some notes are also created on commercial properties.
If you do not wish to wait for your monthly payment, we will cash you out. You can choose to sell either part of the note or all of the note. We will give you a choice by quoting 2 or 3 different amounts for parts or all of your note.
We buy the following Mortgages notes:
Residential Notes –
Mortgages, Deeds of Trust, or Land Contracts that are created by the sale of:
Residential Properties
Houses
Townhouses
Condominiums
1-4 Family UnitsCommercial Notes -
Mortgages, Deeds of Trust, or Land Contracts that are created by the sale of any type of commercial property:
Office
Retail
Apartment (more than 1-4 family units)
IndustrialVacant Land Notes -
Mortgages, Deeds of Trust, or Land Contracts that are created by the sale of any:
Developed Land
Undeveloped Land
Land not designated as a specific use property such as farm land or waste storage.*This category does not include land that has been improved for development and building.
Today, owner financing has become an established and accepted practice in real estate. And because of the private mortgage industry, owner financing is an even more attractive option that it once was in the past.
Sell all or only a portion of your privately held note.
You may even sell future payments today while still receiving current payments.
We can facilitate the sale of existing private mortgage notes, portfolios of residential or commercial mortgage notes, or can arrange point of sale funding, also called table funding or simultaneous closing.