what is a mortgage note

What is a Mortgage Note?

A mortgage note is a promissory note, where the maker… the signer… pledges real estate as collateral if the signer does not make the payment schedule as agreed.

What items must a Mortgage Note include?

A mortgage note is a legal document which displays the loan amount, interest rate, and the amortization schedule (length of time until the mortgage note becomes due). The collateral agreement, which allows  the lender to enforce the terms of the mortgage note is simply called a mortgage. In some states that collateral agreement is called a deed of trust.

Difference between a Mortgage and Mortgage Note

It is easy to confuse a mortgage note with a mortgage (sometimes called a mortgage deed). The mortgage note is the promise to pay back the loan. A mortgage (or mortgage deed) specifies the collateral that secures the loan… the house, property, or other real estate. The mortgage or mortgage deed is the security instrument, so if the borrower doesn’t pay back the  loan, the property can be sold to repay the loan.

How a Mortgage Note Works

Let us use the sale of a home as an example. First, the buyer and seller agree on a sales price. Many times, the buyer does not have all the money to buy the home.  So, the buyer makes a down payment and looks for financing to complete the purchase. 

That financing can be from a bank or the from the seller. The contract between these two parties is called a mortgage note (or promissory note).

If the seller finances the loan, the buyer makes his mortgage payments directly to the seller. The seller then has the option to keep collecting payments until the total debt is collected or sell the note to note buyers.


Mortgage Notes Are Unpredictable

While mortgage notes promise a consistent income stream, there is also risk for the seller. If the buyer falls behind on payments or stops making payments, the seller can lose a substantial sum of money. Although, the mortgage will permit the seller to take legal action against the buyer, this can often take time and cost the seller a lot of money.

But… Mortgage Notes can be sold for Cash

The biggest benefit of selling to a note buyer is immediate access to your cash. There’s no waiting for the loan to be repaid over months or years of time, nor is there any risk of non-payment. Our mortgage note buying process will allow you to sell all or part of your note payments to pay off debts, to solve another financial problem… or just get rid of the burdensome IRS bookkeeping or potential foreclosure. Maybe your note is performing fine, you’d just like to free up some cash. Everything you are dealing with right now—the stress, hassle of managing your promissory note payments, the waiting to receive your money—could be OVER in a few short weeks. 

As we are mortgage note buyers for over 30 years, so you might want to see what other note sellers have had to say about dealing with us, here.

Can you sell part of your mortgage note?

Yes. Most times you will receive more money by selling some payments now and some payments later. Check out a few examples, here.

As mortgage note buyers for over 30 years, we have been helping note holders just like you when selling a private mortgage, selling a private trust deed,  or selling almost any owner financed note. We’d are here to help! When you are thinking that you want to sell your mortgage note, reach out to us. We are National mortgage note buyers, so if you want to free up cash in any  real estate note you own… we will help! If you’d like to speak with someone before submitting your note information, just give us a call today at (772) 232-2383. Or check out our mortgage note buying process here.

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