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The current mortgage lending and real estate debacle has created a huge boom in the private mortgage note business (Mortgage Notes created as a result of owner financing). Anxious home owners are increasingly becoming the mortgage lender by necessity as lending institutions have moved to the other extreme in mortgage lending practices. In the sub-prime days, mortgage companies would give you a mortgage, in many cases for 100% of the home’s value if you simply had a pulse. Now, with the exception of government backed mortgages (FHA, VA, USDA), you will need twenty percent down, almost pristine credit and 100% documentable income via federal tax returns. Unfortunately, these very tight lending practices have left many very good, low risk home buying prospects out of the market. This is particularly true for millions of self-employed homebuyers who often have plenty of cash for a down payment ansd good credit. These homebuyers simply may not be showing a lot of taxable income so as to keep their taxes to a minimum. Their aggressive tax strategy means they can’t get a a home loan. As a result, the home seller needs to step in to save the day.

 

Now, I realize that every homeowner may not have this option, but it could be a great alternative for a lot of home sellers. {It is a great option for homeowners who have some equity in the property as opposed to those where the mortgage is equal to or greater than the value of the home.|It will work best for homeowners that have a lot of equity in their home where as it won’t work for people with little to no equity.} Interestingly, a lot of home sellers are not even aware that it’s possible to sell this owner financed note, which is a highly valued marketable financial instrument. They can even sell their private note to a mortgage buyer (also known as a note buyer) within a few months after closing when the note accrues a little “seasoning’. Many note buyers will be willing to convert the mortgage into a lump sum of cash. This essentially gets the seller an all cash deal and although the homeowner takes a discount on the private mortgage to sell it (a dollar today is of more value than a dollar tomorrow), the result is it moves the home quickly, usually fetches top dollar and the property can usually be sold without any sales commission. The net result is almost always win for both the seller and buyer.

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