Selling A Mortgage Note 101

mortgageAre you one of the many Americans that own a mortgage note? You may have become the owner of a mortgage note if you have chosen to owner-finance a piece of real estate. In our country’s current economic landscape, many Americans have and continue to choose to owner-finance their home or other real estate as an investment opportunity. After all, owner financing can be a great choice for buyers and sellers alike.

Owning a mortgage note is a handy way to earn some extra income and can be a great investment opportunity for many Americans, but the majority of those who hold a mortgage note reach a point over the life of the loan when they decide, for whatever reason, they want to sell all or part of their mortgage note. There are many reasons one might want to do this:

  • Selling a mortgage note gets you almost instant cash, cash that can be used to make a variety of big purchases like a new home, home repairs, buying an RV or new car, or paying off debt. Depending on the size of the mortgage, the cash you receive could be a lot or a little
  • No longer want the responsibility of managing the mortgage note.
  • Looking to invest in a more financially lucrative investment.

I Want to Sell My Mortgage Note. Where Do I Start?

Begin the process by obtaining as many quotes as possible. Once you’ve created a good list of potential buyers, give them as much information as you can concerning the current condition of your mortgage note. This way you will obtain the highest number of quotes at the most accurate values.

Choose a Reliable Company

Before you say ‘Yes!’ to the highest bidder, be sure they are trustworthy and easy to work with. Narrow your list of quotes down to the three or four that offer the best price. Then check them out in-depth to learn which company you feel the most comfortable working with. Look for a company that has a clean Better Business Bureau record and friendly, knowledgeable staff. Don’t make the mistake of only basing your decision on which company offers the best price because you could end up in trouble if you find out that they are not a reputable business.

I Will Receive the Full Value of the Note, Right?

It depends on how you personally define the ‘value’ of your mortgage note. Many note-holders misunderstand that their note is worth the total amount of the remaining payments. Unfortunately, this is not the case. Investors know that money will not be worth the same amount in the future as it is today. The value of money decreases over time. Therefore, you would only receive the exact sum of the total remaining payments if the individual paying the mortgage were to pay the entire remaining balance on the day you sell your mortgage note. And still this amount would be less than you expect because they wouldn’t be paying you years of interest on top of the original loan balance. Additionally, several other factors affect the value of your mortgage note to investors. Some of these are:

  • The type of property
  • The property condition and value
  • The remaining balance on the loan
  • The current interest rate
  • The payer’s current credit history
  • The interest rate at the time of the loan
  • The payments made vs. payments remaining
  • And more

As you can see, a large variety of factors come into play when determining the value of a mortgage note. Speak with your investor in-depth about how the value of your mortgage note will be determined. They will have specifics on their company’s particular procedure.

Is Now a Good Time to Sell?

When interest rates fall, the value of mortgage notes rise. Right now interest rates are very low which means—you guessed it—your mortgage note’s worth is very high. If you’ve been considering making a sizeable purchase, investing in a more financially lucrative opportunity, or have a large debt you would love to pay off, now is a great time to sell your mortgage note. And as an added bonus, you’d no longer have to worry about the worry and hassle that came with owning the note in the first place.

Owning a mortgage note is a good financial investment and often a beneficial way to buy and sell real estate, but few people choose to own their mortgage note for the twenty or thirty years it will take for the payer to complete their payments. If you have been considering selling your mortgage note and if you believe that interest rates are only going to go up, then there really is no better time to sell your mortgage note than now.


  1. I’ve looked into the mortgage note market, mostly when I had a high-interest subprime mortgage on some investment property. I’m more of an index fund, I’ll-be-the-tortoise and not have to worry about one borrower paying back a note or foreclosing, guy these days. But interesting stuff.

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