How To Sell a Mortgage Note

A mortgage note is a legal document for purchasing real estate, such as land, a house, or a condo. Understanding how to sell a mortgage note can help holders turn their investment into immediate cash while ensuring the process complies with industry standards.

A private mortgage note refers to one held by a private source rather than a traditional lender. Private mortgage note holders could be a family member, a business, or the seller of the property. Holders of private mortgage notes often choose to sell the note as well.

Below are some tips for selling a mortgage note.

Reasons to Sell a Mortgage Note

Selling your private mortgage note can provide quick cash and relieve you of management responsibilities. Common motivations include:

Immediate Financial Needs: Access cash for emergencies, medical bills, or urgent expenses.
Retirement Planning: Secure a lump sum to support your retirement goals.
Estate Management: Simplify dividing assets or cover probate costs.
Freeing Up Capital: Reinvest in higher-yield opportunities like real estate or stocks.
Lifestyle Changes: Cover costs for senior living, relocation, or downsizing.
Avoiding Management Hassles: Eliminate the time and effort of collecting payments and managing borrowers.

Whether you’re looking to “sell my private mortgage note” or explore flexible options, Deed Street Capital makes the process fast and hassle-free.

Think Ahead When Planning How to Sell a Mortgage Note.

One way to be sure you can successfully navigate how to sell a mortgage note is to set it up properly in the first place. Many buyers will hesitate to buy a note if the buyer is a credit risk or if the buyer has not made a sufficient down payment. For example, a note from a borrower with a credit score of 550 will be much more challenging to sell than one from a borrower with a 700+ credit score.

If the borrower can’t make a large enough down payment, you may still be able to structure the deal for a sale by creating both a first and second mortgage. The first mortgage might be for 75 to 80 percent of the property’s value, with the second one being for the remaining 15 to 20 percent. You would then sell the first mortgage and keep the second.

Determine How Much of Your Mortgage Note to Sell

Deed owners can sell all of a mortgage note or just a portion. Most sellers opt for a full sale, which sells the entire note for a lump sum. Both types of sales will provide immediate cash; the difference is in the amount. A partial sale can provide immediate cash while allowing the holder to retain a small ongoing payment stream.

Understanding Partial Sales

A partial sale is a flexible option that allows note holders to sell a portion of their mortgage note while retaining the remaining payment stream. This approach provides immediate cash flow without giving up the long-term benefits of future payments.

Benefits of Partial Sales:

Immediate Cash Flow: Access funds quickly for pressing needs or investments.

Retain Future Income: Continue receiving payments from the unsold portion of the note.

Flexibility: Tailor the sale to your financial goals, whether it’s covering short-term expenses or diversifying your income streams.

Deed Street Capital offers options for both full and partial sales, ensuring you can choose the solution that fits your needs. Whether you’re looking to “sell my mortgage note” entirely or “sell private mortgage note” partially, our team makes the process seamless and transparent.

How to Find the Right Buyer for Your Mortgage Note

Two types of buyers are generally interested in mortgage notes, real estate investors and institutional buyers. Experienced real estate investors will not yield the most for your note. You’ll want to sell to an institutional note buyer such as Deed Street Capital rather than a note broker in order to bypass the middleman and secure the best offer on your note. Also, realize that many institutions will want the payor to have made at least 3 to 12 payments first to show a history of on-time payments from the payor.

What Is a Note Purchasing Company?

A note purchasing company specializes in buying mortgage notes from private holders, providing a straightforward way to turn long-term payment streams into immediate cash. These companies operate in the secondary mortgage market, evaluating the value of notes based on factors such as payment history, borrower creditworthiness, and the remaining loan balance.

Reputable note purchasing companies, like Deed Street Capital, focus on making the process seamless and seller-friendly. Whether you’re asking, “How can I sell my note?” or “Where do I sell my mortgage note?” these companies are designed to meet your needs. Unlike traditional lenders, they offer competitive cash offers for your mortgage notes without factoring in your personal credit score—ensuring you can access funds quickly and efficiently.

In addition to simplifying the process, trustworthy companies handle all associated costs, including appraisals and title searches, giving sellers peace of mind. Whether you’re selling part of your note or opting for a full sale, they customize their services to fit your financial goals.

Embrace the Process of Selling a Mortgage Note

Understanding how to sell a mortgage note is a process that requires preparation. You’ll need to bring copies of the promissory note, title commitment, and closing statement to the sale discussions. Many institutions will provide a quote based on these documents. Three main factors are essential in determining the size of the quote: the amount of equity in the property, the buyer’s credit score and the length of the payment history so far. If the quote is satisfactory, you’ll sign a sales contract.

After the contract is signed but before the sale closes, the buyer will thoroughly evaluate the property. The buyer also will conduct at least a drive-by appraisal and perform a title search to ensure no liens or other restrictions encumber the title.

Receive your Money at the Mortgage Note Closing

Once you’ve followed the steps on how to sell a mortgage note, and the note buyer has verified the property’s value and found a clean title, the sale will close, and you’ll receive your money. The new owner will notify the borrower that the mortgage has been sold. The borrower’s terms don’t change; they’ll just make payments to the new owner.

Easing the Sales Process of Selling a Mortgage Note.

Deed Street Capital buys mortgages for cash. We buy various types of mortgages, including:

Balloon notes
Contracts for deeds
Deeds of trust
First liens
Land contracts
New or seasoned notes (where the borrower has already made several payments)

FAQs

How much is my mortgage note worth?

The value of your mortgage note also depends on variables such as the buyer’s creditworthiness, the down payment made at the time of purchase, the property’s current market value, and the payment history on the loan. A note with a strong borrower history and high equity will typically fetch a higher price. To get an accurate valuation, consulting a reputable note buyer for a detailed quote is advisable.

How do you value a private mortgage note?

Other factors influencing the value of a private mortgage note include the loan’s seasoning (how many payments have been made), the loan-to-value (LTV) ratio, and the type of property securing the note. Notes secured by high-value properties with low LTV ratios and consistent payment history are generally more valuable. Additionally, balloon payments or shorter loan durations can also make a private note more attractive to buyers.

Can you transfer a mortgage note?

Yes, mortgage notes can often be transferred through the process of assignment. This involves legally transferring ownership of the note to another party, such as a private investor or mortgage note buyer. While the terms of the mortgage remain unchanged for the borrower, the new owner of the note assumes the rights to collect payments. Ensure you work with a legal professional to properly document the transfer and comply with state regulations.

We’ll make deals for partial or full note purchases with values between $25,000 and $3 million. Unlike some institutions, we’ll also buy portfolios that include performing and non-performing notes. Non-performing notes are those where the borrower is not meeting the payment terms. We are experienced buyers, provide a no-obligation quote and typically close the sale in less than four weeks.