How can I determine my private mortgage note value? The market value of an seller financed mortgage note is defined as the maximum cash price a note holder can sell it for in a competitive marketplace. So, how does an investor calculate my mortgage note value? As a note investor, we can provide an “estimate” of the note value based on the preliminary information provided to us. We can provide a firm price offer for the note after performing a formal “due diligence” investigation.
Mortgage Note Value
A note investor will establish the value of your mortgage note based on a variety of factors:
1. Type Of Property – Generally the market value of a note secured by a single family residence will be higher than a note secured by land or commercial property.
2. Size Of Down Payment – The higher the down payment at the property closing, the higher is the equity of the Borrower in the property and greater expectation of future consistent payment history. Basically there is less risk to the note investor.
3. Property Current Value – If the property´s current market value has increased since the mortgage note was issued (the property has appreciated in value), the note investor will perceive less risk and higher potential for return on the investment. Conversely if the property value has decreased, there is higher risk to the note investor and likely a lower offer made.
4. Interest Rate – The higher the interest rate on the note, the more attractive is the mortgage note to an investor. Basically the note investor will be earning more than other investment types.
5. Number of Payments Remaining – Shorter term notes are valued more highly than longer term notes (time value of money). The longer-term stream of payments has higher risk rather than shorter-term payments to a note investor.
6. Current Interest Rates – With market interest rates at historical lows the market value of a private mortgage note is high. When mortgage interest rates begin to rise the market value of fixed-rate mortgage notes will react inversely and begin to fall.
7. Borrower´s Credit History – The higher the Borrower’s credit score the higher the market value of a note since the note investor perceives less risk in receiving future payments from the Borrower. Also included will be a review of the Borrower´s note payment history.
Please call us at (888) 213-3383 to help establish the market value of your mortgage note or Contact Us via Email.