There are a variety of private mortgage note sale options available to the note owner. The most common mortgage note sale option is the Full Sale where the note owner wants to cash out, selling ALL the remaining note payments as quickly as possible. Less common and less understood is the Partial Sale. This mortgage note sale option provides the note owner with greater flexibility and greater long-term income by selling only a portion of the remaining note payments. This is why it is important for you as a note owner, to know what your private mortgage note sale options are and to conduct business with a company that will look out for your interests.
Mortgage Note Sale – Full Option
The full sale option is the most popular with note holders. There are many situations where note holders can only accomplish their goals by selling all of their remaining note payments.
- The note holder needs to generate as much cash as possible from the note sale.
- When the note holder wants to sever all responsibilities from the mortgage note investment (e.g., divorce, inheritance, relocation).
- A note holder may want to liquidate the entire mortgage note investment to settle an estate, provide funds for elder care or qualify for Federal Medicare assistance.
- The note holder wants to eliminate servicing hassles and risk of foreclosure associated with owning the mortgage note.
Mortgage Note Sale – Partial Option
For most note holders the option of selling a portion of their remaining note payments, rather than all of them, will best accomplish their goals and provide the highest total dollar return. In some situations, the characteristics of the note and/or the value of the property securing it make selling all of the remaining note payments impossible. In those situations, the note holder can still take advantage of the partial sale options to generate the cash they need.
- If the borrower has a poor credit history.
- When the mortgage note has a low interest rate.
- The mortgage note has a long term remaining.
- If there is an upcoming balloon payment due on the mortgage note.
- When the borrower has a small equity position in the property.
Mortgage Note Partial Sale – Benefits
In other situations, selling a portion of the remaining note payments is clearly the best financial option for the note owner. The partial purchase proposals offer several significant advantages over selling all of the remaining payments due on a mortgage note.
- When it is not possible to sell the entire mortgage note, the partial sale allows the note owner to access a portion of the cash tied up in their note investment.
- If the mortgage note owner only requires a specific amount of cash now, while desiring the note investment for a future income stream.
- The mortgage note owner may want to customize exactly what selling their note achieves for them.
- When the mortgage note owner wants to minimize the discount involved in accessing cash from their note. Remember, selling the up front note payments will always involve a discount, but note owners will receive the full return for the remaining note payments they keep.
- If the note owner wants to receive the highest return from the sale of the mortgage note.
Mortgage note holders who choose to sell a portion of their note payments achieve the best of both worlds; the capital they need and a valuable residual interest in the note for future income. If you are in position to take advantage of a partial sale of your mortgage note we recommend that you should seriously consider this option.
Please call us at (888) 213-3383 to explore the mortgage note sale options available to you or Contact Us via Email.