Some Questions Note Holders Ask.
Have questions? No problem. Here are some of the common questions we get from note holders. If you still have a question don’t hesitate to shoot us an email through our contact page or give us a call.
Q: Why should I even consider selling my note in KS?
A: If you can make better use of the money tied up in your note, then selling is the best way to get that cash out. Selling the entire note is one option, but selling some of the payments is a way to get some cash now and preserve the cash flow for later. Ask us how and if your note qualifies ››
Q: Why should I sell my note to Positive Note Solutions?
A: We are honest, we offer some of the highest prices and we make the sales process easy. Plus after you sell your note:
- You won’t have to worry about admin tasks like IRS income tax reporting requirements, IRS tax liens against the payor, collecting payments, etc.
- You won’t have to worry about borrower issues like bankruptcy, divorce or death, defaulting on your note. (that’s for us to worry about)
- You won’t have to worry about destruction and devaluation of the property / asset.
- You won’t have to worry about your note being assumed by another borrower who turns out to be a deadbeat.
Q: How do you come up with the price to buy my note?
A: When we look at a note to buy we look at a few factors:
1) The note: Payment amount, down payment, interest rate, number of remaining payments.
2) The asset: Details about the home backing the note. If it’s a quality asset, the note will be worth more. Ultimately, we have to decide if we are willing to own the property if the borrower defaults on the note.
3) The borrower: The payment history, credit profile, and work history. How well have they paid in the past and how likely are they to pay in the future.
With all of that we’ll calculate the value of the note and present an offer. The offer will be discounted from the value of the note. We have to buy at a discount in order to make money in the deal.
Once we understand the situation, we’ll make you an offer. This offer is based off of the value of the note, the risk on us receiving the payments from the borrower, and the quality of the security backing the note (real estate, etc.). You can expect to receive an offer that is a discount on the full remaining payment value based on the factors above.
Q: What are some problems that can affect the value when selling mortgage note?
A: Sometimes a note will sell for less because the terms aren’t favorable, the borrower is a high risk, or the property value is too low compared to the balance of the loan. Mistakes are often made like taking no money down, or creating the note with a low interest rate that can greatly impact the value of a note. Additionally, failure to properly qualify borrowers and collect and record payments on the note can cause problems when going through due diligence on the note sale.
Q: What are characteristics of a high value mortgage note?
A: A high value mortgage note is one that was intentionally created and managed according to some best practices.
1) Well documented, well qualified borrower: use a licensed Residential Mortgage Loan Originator to qualify your borrowers. This documentation keeps your loan fully legal and adds great value to it when you sell. A well qualified borrower may be a bit harder to find, but spending time up front qualifying them will save you a lot of hassle and money down the road when you don’t have to deal with missed payments or a defaulted loan and foreclosure.
2) Well prepared note paperwork: Use a lawyer to draw up the note and deed of trust or mortgage according to the state the property is located. It doesn’t need to be complicated, just well prepared and legal. Additionally get title insurance policies to document that the title is clean.
3) Good note terms: You are not a bank. Seller financed notes should have higher interest rates than bank loans. Your borrower would get a bank loan if they could. The fact that they cannot means they are a higher risk. Your interest rate should reflect this. Try to create your notes with interest rates in the six to nine percent range. Solid down payment: at least ten percent, more if they can afford it. A borrower with skin in the game is less likely to default. Shorter term, ten to fifteen years. Seller financing should be a shorter term option, a borrower who pays consistently for five to ten years should be able to refinance at better terms due to the solid pay history. Additionally, shorter terms loans generally sell at lower discounts due to the repayment coming sooner.
4) Strong collateral: The property securing the note needs to be in good shape and worth more than the loan value. Get an appraisal at the time of sale to document the value of the property.
5) Verifiable payment history: use a good licensed loan servicer who reports to credit agencies to collect your payments and prepare tax documentation for your borrower. The cost is not high and the value it adds to your note is considerable. Having the payments reported against your borrower’s credit allows them to improve their credit score which increases the value of your note and puts them in a better situation financially.
6) Affordable: Your note will plummet in value if the borrower stops paying. Make sure that you are creating a situation where they can afford the payments on the property even if life throws them some curveballs.
Q: Are there any fees or commissions to sell a note to you?
A: There are NO fees or commissions to work with us. We’re KS based note buyers and we buy notes with cash when they meet our requirements. If they don’t meet our requirements, we may broker them to other note buyers. We don’t charge the note seller any fees or commissions in either case. You won’t pay any costs during the process. We pay all costs associated with the note sale transaction. You get access to the cash trapped in your mortgage note without any hassles.
Q: Is there any obligation when I submit my info?
A: No obligation at all. Once you tell us a bit about your note, we’ll take a look at things, maybe set up a call with you to find out a bit more about the borrower or to confirm some details, and make you a cash offer that’s fair for you and fair for us.
The whole time it’s 100% your decision on whether or not you’d like to sell your note to us. Once you get our offer we encourage you to research it, shop it around if you want to, and ask us any questions you want. No pressures. No hassles.
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