If you own rental property, you might want to consider selling your mortgage note to an investor. Doing so can help you obtain a lump sum of cash to pay off debt, medical expenses, college tuition or other expenses. The amount of money you can receive will depend on various factors such as the type and location of property, interest rate and credit worthiness. If you have never sold a real estate note to an investor, you would be wise to conduct research or work with a professional, in order to fully understand the process.
The first step involves providing information about your note. Potential investors will want to know the face value of the note, balance due, interest rate, how many payments have been made, if the note is current or delinquent, and the asking price. Prior to speaking to investors, be certain to organize your paperwork and have everything ready when you meet.
Typically, investors will require a few days to review your proposal and provide you with an initial offer. If you accept the offer, additional documentation will be required before the deal can be settled. You'll need to provide a current tax return, documentation of income, title insurance and amortization schedule.
Next, an appraisal of the property is required. Some mortgage note investors will require the services of a professional appraiser. The investor may or may not cover this expense. It will depend on the terms of your negotiation. A few investors only require a "drive-by" inspection; however, it's wise to be prepared to hire a professional real estate appraiser if one is required.
Once the appraisal has been conducted, it's time to close the deal. Depending on the situation, closing can take place in person or by mail. Original copies of security documents including the Deed of Trust, mortgage note, and contract for deed of the property you are selling will be required. Therefore, if you close the deal via mail, make certain to make a minimum of two original copies and send the documents via registered mail with a required signature.
The primary document you will sign at closing is the Assignment of Mortgage. This form needs to be recorded at the local courthouse. This document transfers all or part of future payments to the mortgage note investor. Upon approval, the investor will either issue a check or transfer funds directly into your bank account.
Keep in mind the original security instruments will remain in your name. The Assignment of Mortgage agreement outlines the number of future payments which have been sold. If you are selling only a portion of your mortgage note, a Partial Purchase Agreement will be required. Once the terms of the partial agreement have been met, the mortgage balance or agreed-upon amount reverts back to you.
Simon Volkov is a professional Real Estate Note Investor helping individuals who need to liquidate their real estate. Simon offers numerous investment opportunities for serious investors via RSS feed and email subscription. His website, SimonVolkov.com provides resources and articles on today's real estate and financial market. Learn more about real estate and financial services offered by visiting http://www.SimonVolkov.com
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