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We are the MLS of The Private Paper Industry... We help people who have future

income liquidate it for a lumpsum of cash now.

An overview of this business: The discounted mortgage business has been in existenc e since people owned realestate. Currently there are over $150,000,000,000 in owner financed trust deeds and mortgages nationwide. Many people holding '' paper '' would like to sell it if only they knew the option existed. There are so many cashflow notes in the united states that if you could find $1,000,000 worth of notes ,without skipping a day,it would take you over 240 years to find all of them- and get this- that's just the realestate notes. There are over 50 additional types of notes in the market totaling over one trillion dollars.

Why are realestate notes so great: The note (I.O.U.) is security,which means it is a promise to pay,It states the terms in which the obligation is to be paid such as,the amount, the interest rate,when the note is due and to be paid in full,etc. Some states use the trust deed as a primary security instrument and other states use the mortgage contract. The difference between the two instruments is the manner in which the property is forclosed.

Lack of Confidence: In the person making the payments-the Note Holder is afraid that the person making the payments will stop. In the realestate securingthe note the property may depreciate in value. In he economy the Note Holder may fear the future economic conditions.

Deferred Gadification: People don't like to wait for their money. Give them what they want "' the now benefit"."

Don't wanters: Most note holders never wanted the note in the first place. They feel as if they are stuck with the note. They would rather have cash.

Imperfect Market: Seller is not aware that he/she can sell their note to an investor for a lump sum. Negotiate freely. The biggest reason people want to sell their notes is because they never wanted the note in the first place.

Outstanding Bills: Here are several reasons why a seller might sell his/her note.

1) Advantage of a lumpsum of cash now instead of no more small monthly payments

2) Medical Emergencies

3) Immediate cash to pay off tax debt

4) Pay off credit card debt

5) Paying for college education

6) Buying a new dream home or business

7) Taking a dream vacation

8) Retirement

9) Divorce

10) Distribution of partnership

11) Division of inheritance

As you can see,there are any number of situations that arise where The Note Holder will need our services to cash them out. The most important reason is that they never wanted the the note in the first place.

The Time Value of money

Why a dollar is worth more today than tomorrow: When determining the value of a realestate note we must consider the following:

1) Where the property is located?

2) What type of property is it,and what is it's value?

3) What is the interest rate on the note,and what are theterms?

4) How long will it take to collect all the payments?

One of the most important factors is usually the length of time it will take to collect all the payments.The longer we wait,the less value or buying power the money has,due to inflation and economic conditions. This is what is referred to as the Time Value of Money. Immediate cash is more valuable than money to be received in the future.

The History of The Realestate Cash Flow Industry: Seller's Financed Transactions have existed for ages. In such transactions,sellers assist buyers in the purchase of seller's property,by agreeing to accept deferred payment for all,or part, of the purchase price being paid for the assets.In most instances,the assets themselves are pledged as trustdeeds,landcontracts,mortgages,security agreements,etc, for the installment note. Buyers for these seller- originated casflow instruments have always existed as well. However,until the past few decades,there was no active network that could move money from point A to point B, to create a liquid market for these seller "carryback" purchase-money assets; there were no structured channels for marketing and directing seller-carryback loans up a nonexistent investor pipeline. Sellers who wanted,or needed,to convert their "private paper" notes to cash,didn't have many options. What market there was for selling the paper was almost exclusively local - purchasers for these notes were limited to the seller's and/or buyers advisors,or private investors these advisors personally knew. For decades,the most active participants in this arena were local realestate brokers and exchangers,who purchased or created realestate notes as a method for increasing their sales transactions. As they ran out of money,they brought in local private investors to purchase the notes. Occasionally,local banks might also be purchasers for the paper,if one of the parties involved was a very good customer. In the mid 1950's, some institutional private note buyers had come into existence. By the late 1970's techniques used in the private paper financing,and the mention of teh existence of the fragmented private paper marketplace began showing up in mainsrteam realestate financing literature: such as Joseph Bagby's Realestate Financing Desk Book (Institute For Business Planning,1977); Jack Cummings The Complete Guide To Realestate Finance (Prentice-Hall, 1978); and Frank Coffee's Creative Home Financing (Simon-Schuster,1982). By and large,the buying and selling of private paper was limited to the local marketplace- and the farther away the property was from the major metroplitan area, the less likely the chances of finding a buyer for the note. A huge part of this equation was the local liquidity factor! When local private investor money ran out,the notes couldn't be sold,and in that particular locality,existing seller-held paper became highly illiquid until funds were again available. In the case of sellers desperate for cash,this frequently led to extremely deep discounts on the sale of the paper. In teh scheme of life,such circumstances create a vacuum - sooner or later,money follows the path of least resistance. By the early 1980's, individuals who had been successful in finding and/or investing in private paper notes began holding seminars and self-publishing training courses and books,to draw in more potential investors. But another main objective was to attract and retain students as sources of more note deals,by creating informal networks to facilitate more finder - to - finder transactions which enterprising individuals recognized would bring more liquidity to the marketplace,and increase the volume of potential deal activity. Since the launching of it's note finder networking system in November 2007, RW's Ca$h 4/Note Service has established a nationwide presence as the premier private paper network for the buying and selling of secured cash flow instruments, generating millions of dollars in cashflow listings, including private realestate notes, business notes,structured settlements, related debt instruments, and the list goes on ... "We are the MLS of the Private Paper cash flow industry!"

Seller Financing for Real Estate: What Investors Should Know.

The benefits and burdens of behaving like a banks.

Selling a house with owner financing may be unfamiliar territory for many real estate investors, but anyone who plans to sell property against the current background of tough lending conditions may want to brush up on the basics. Understanding the concept of seller financing is easy: the seller assumes the role of a bank and finances the buyer’s purchase. The decision to provide seller financing, however, can be much more difficult; although providing owner financing could mean the difference in being able to sell a house, it could also mean a great amount of risk for the seller if the buyer eventually defaults on the loan.

As the country struggles with a sluggish real estate market, seller financing presents a way for buyers and sellers to close deals that might not be possible with conventional financing.

“There are some deals that just simply cannot get done [with conventional lending] because the credit markets [are]…too tough for a particular buyer to qualify or because the type of transaction [is] too risky,” Brian Moore, a partner with Roetzel & Andress, LPA and chairperson of the Ohio Real Estate Practice Group, said. There could also be a situation in which a buyer may not have sufficient capital for a down payment, Moore added. Partial seller financing, in that case, can help fill in the gaps in closing a deal. In addition, the benefits of owner financing can appeal to sellers who are trying to unload property, Moore said. Closing a deal on a house, for example, may take considerably less time with seller financing than with conventional financing. While a conventional lender will scrutinize the collateral property to determine the level of risk, a seller who is already familiar with the property can form his or her own risk assessment relatively quickly.

Financing as an installment sale can have tax advatangesSeller financing may also be an attractive choice for investment, potentially offering high rates of return. “A seller can negotiate an interest rate that the buyer will pay them that is more favorable than would be available for other sorts of investments,” Moore said. Furthermore, seller financing can provide some tax benefits by spreading out a large gain over time. If [the seller] structures [the loan] as an installment sale, there can be certain tax advantages to the seller as well in terms of...the timing of recognition on the [capital] gain,” Moore said. The seller would need to discuss the details with a tax advisor.

Seller financing can be used to pay for a property either in full or in part. The terms of a full loan look similar to those of a conventional loan; however, a seller has a great deal of freedom in setting the terms, such as the interest rate and the duration of the payment period. For instance, a seller might wish to provide seller financing as a short-term arrangement of five years, after which the borrower is expected to refinance the loan, “presumably with conventional financing,” Moore said.

Although partial seller financing offers similar flexibility, it can be more complicated because of the three-way relationship created between the seller, buyer and conventional lending institution. In most cases, the conventional lender will assume first position in a default scenario. “[The] conventional lender is...going to...make sure that whoever holds that second mortgage doesn’t...disrupt the buyer down the road, in a way that would prevent that buyer from paying on the first mortgage,” Moore said. Thus, the seller and the lender will often need to reach an intercreditor agreement outlining how and when the seller can collect his or her debt in different default scenarios. Such an agreement might include a standstill obligation, for a situation in which the first lender is receiving payments, but the second lender (the seller)is not, Moore said. A standstill would ensure that the second lender is not able to institute litigation against a delinquent buyer, thereby disrupting the first lender’s income stream. A seller who provides seller financing will need to get the mortgage recorded in accordance with the specific execution and acknowledgement requirements of the state. Sellers should also work with a title insurance company to perform a title search and purchase title insurance to secure the right priority for the mortgage, Moore said.

A title insurance company can also serve as a good resource for understanding how much it will cost to record the mortgage–an amount that can vary substantially depending on which state the property is located in. In some states, the cost to record a mortgage or deed of trust is minimal, consisting of a basic administrative fee added to an amount that varies according to the number of pages, Moore said. “Other states may have stamp taxes or documentary fees that can be much more significant, or can be based on the amount of debt secured by the instrument,” Moore said. Generally, the cost will “depend on how many documents are involved and how sophisticated those documents need to be,” Moore said. The size of the property and the intensity of due diligence procedures factor into these costs.

“If it’s...a simple scenario [such as a] small little residential deal, it might be under a thousand bucks,” Moore said. “If you [provide seller financing for] a sophisticated apartment building or strip center...it can be multiple thousands of dollars.”

In most cases, sellers prefer to have cash instead of a promise by the buyer to pay them later, Moore said. In addition, sellers who consider seller financing “need to understand the risk that the buyer might not pay you in whole or in part, or might have financial distress situation arise down the road, where after a year or two...the payment stream to you is disrupted by their financial distress.” Because sellers do not have the same resources as conventional lenders, financing a buyer can be even more intimidating. While banks can absorb the risk of nonpayment by spreading it across their entire loan portfolios, an individual seller isn’t typically able to do that, Moore said. Furthermore, it’s more difficult for a seller to choose the best loan terms in accordance with the perceived risk/return. “There’s no science to that because you’re not a conventional lender,” Moore said. Because of the serious risks involved with seller financing, sellers should do their homework ahead of time and decide whether it is an option within their level of risk tolerance. Preferably, a seller should make this decision early in the process of selling a property, well before any offer is on the table. “You need to decide that up front so that you can package your materials in contemplation of what you’re willing to do relative to seller financing,” Moore said. Lawyers who are familiar with financing and financial documents can be critical resources in the time preceding and immediately after making the decision to offer seller financing, Moore said. A lawyer can help a seller understand the ramifications of seller financing and design the appropriate paperwork. “[Sellers] just need to be prepared for...what happens if [the deal] goes south,” Moore said. Sellers can then adjust the language and terms in their loan documents accordingly, such as setting a higher interest rate that’s reflective of the higher risk, or requiring personal guarantees and other forms of credit enhancemen

As the country struggles with a sluggish real estate market, seller financing presents a way for buyers and sellers to close deals that might not be possible with conventional financing. “There are some deals that just simply cannot get done [with conventional lending] because the credit markets [are]…too tough for a particular buyer to qualify or because the type of transaction [is] too risky,” Brian Moore, a partner with Roetzel & Andress, LPA and chairperson of the Ohio Real Estate Practice Group, said. There could also be a situation in which a buyer may not have sufficient capital for a down payment, Moore added. Partial seller financing, in that case, can help fill in the gaps in closing a deal. In addition, the benefits of owner financing can appeal to sellers who are trying to unload property, Moore said. Closing a deal on a house, for example, may take considerably less time with seller financing than with conventional financing. While a conventional lender will scrutinize the collateral property to determine the level of risk, a seller who is already familiar with the property can form his or her own risk assessment relatively quickly.

While sellers can be more flexible than banks in considering prospective buyers, they should nevertheless think like a bank when reviewing potential buyers. Examining documents and reports such as tax paperwork, proof of employment and credit history is prudent in determining a buyer’s ability to pay off the loan. Although partial seller financing offers similar flexibility, it can be more complicated because of the three-way relationship created between the seller, buyer and conventional lending institution. In most cases, the conventional lender will assume first position in a default scenario. “[The] conventional lender is...going to...make sure that whoever holds that second mortgage doesn’t...disrupt the buyer down the road, in a way that would prevent that buyer from paying on the first mortgage,” Moore said. Thus, the seller and the lender will often need to reach an intercreditor agreement outlining how and when the seller can collect his or her debt in different default scenarios. Such an agreement might include a standstill obligation, for a situation in which the first lender is receiving payments, but the second lender (the seller)is not, Moore said. A standstill would ensure that the second lender is not able to institute litigation against a delinquent buyer, thereby disrupting the first lender’s income stream. A seller who provides seller financing will need to get the mortgage recorded in accordance with the specific execution and acknowledgement requirements of the state. Sellers should also work with a title insurance company to perform a title search and purchase title insurance to secure the right priority for the mortgage, Moore said.

Generally, the cost will “depend on how many documents are involved and how sophisticated those documents need to be,” Moore said. The size of the property and the intensity of due diligence procedures factor into these costs. “If it’s...a simple scenario [such as a] small little residential deal, it might be under a thousand bucks,” Moore said. “If you [provide seller financing for] a sophisticated apartment building or strip center...it can be multiple thousands of dollars.”

Documentation for simple deals can cost less than one thousandollars. Documentation is perhaps the least of a seller’s worries. For most sellers, the initial decision to provide seller financing can be the most significant hurdle they encounter. “Documentation–that’s not a big deal....It’s done all the time, there’s [a lot] of good lawyers that do it,” Moore said. “It’s deciding to do it, and deciding on how to manage the risks inherent in providing seller financing when you’re a casual seller–that’s the biggest difficulty.”In most cases, sellers prefer to have cash instead of a promise by the buyer to pay them later, Moore said. In addition, sellers who consider seller financing “need to understand the risk that the buyer might not pay you in whole or in part, or might have financial distress situation arise down the road, where after a year or two...the payment stream to you is disrupted by their financial distress.” Because sellers do not have the same resources as conventional lenders, financing a buyer can be even more intimidating. While banks can absorb the risk of nonpayment by spreading it across their entire loan portfolios, an individual seller isn’t typically able to do that, Moore said. Furthermore, it’s more difficult for a seller to choose the best loan terms in accordance with the perceived risk/return. “There’s no science to that because you’re not a conventional lender,” Moore said. Because of the serious risks involved with seller financing, sellers should do their homework ahead of time and decide whether it is an option within their level of risk tolerance. Preferably, a seller should make this decision early in the process of selling a property, well before any offer is on the table. “You need to decide that up front so that you can package your materials in contemplation of what you’re willing to do relative to seller financing,” Moore said.

Lawyers who are familiar with financing and financial documents can be critical resources in the time preceding and immediately after making the decision to offer seller financing, Moore said. A lawyer can help a seller understand the ramifications of seller financing and design the appropriate paperwork.“[Sellers] just need to be prepared for...what happens if [the deal] goes south,” Moore said. Sellers can then adjust the language and terms in their loan documents accordingly, such as setting a higher interest rate that’s reflective of the higher risk, or requiring personal guarantees and other forms of credit enhancemen

Cashing In On Profitable Discounted Mortgages
By Leonard W. Stitt CNA

HOW TO START CASHING IN ON THE BIRTH OF PROFITABLE

DISCOUNT MORTGAGES.

Are you looking for profitable notes? Then you should start showing home seller's the benefits of owner financing. Have you ever wondered where a profitable mortgage and note comes from? That's right. Some one sells their property and carries a contract. This is the heart beat of your note business. Think about it. If no one sold their property with owner financing, you and I would be out of business. That's why you should promote and market the benefits of owner financing. The more it's promoted, the more you'll have a steady supply of private mortgages to buy or broker to a funding source.

ARE SEASONED MORTGAGES A BETTER DEAL?

I've had people tell me they would rather look for seasoned notes. Great. I like seasoned notes too. But remember, whether its seasoned or brand new, the bottom line is its still owner financing.

When you market for seasoned notes you're going to see a lot low quality deals. In other words the mortgage and note was originally set up with weak financial terms. Things like: low down payments, too long a pay back with no balloon, sloppy legal work, or terrible LTV's etc. What's needed is for somebody like you to show these people, in the beginning, when they first sell their property, how to structure good solid owner financing.

DOES IT REALLY PAY TO PROMOTE OWNER FINANCING?

So why should you go to the trouble of showing home seller's how to structure owner financing? Its simple. You want to buy or broker the new mortgage and note that's created from the sale of the property.

I'm here to tell you that home seller's will be eager to sell you their deals. Their eager because you've showed them how to put it together. Plus, they get a faster sale by offering owner financing and carrying the contract. I don't know of a quicker way to sell a house than to offer owner financing.

HOW DO YOU EXPLAIN OWNER FINANCING?

If you can understand and explain the discount mortgage business, you can easily explain owner financing to private home seller's. All you do is put your common sense into action and listen to the needs of the home seller. Let me run you through some examples and show you what I mean.

EXAMPLE ONE

Lets assume you have a seller who's going to sell their home for $125,000.00. All right, the first thing for you to do is find out what the seller needs from the sale. Do they need to be cashed out? If they don't need an all cash deal, how much would it take to fulfill their need? If their trying to pay off bills, find out how much. Maybe their moving to a new location to buy a business. How much money do they need to take over the business? The more information you find out the easier it is to explain what options they have for offering owner financing.

Your goal is to give the home seller the best options you can. That's why you need to get as much information as possible. When you know their financial needs you'll have no trouble suggesting an owner financing plan that suits the home seller.

Now, lets get back to our example of the house that's going to sell for $125,000.00. Lets assume your seller needs all cash. I'd recommend the home seller find a buyer who can put down 10 to 20 percent in cash. The higher the amount the better. Next, I would suggest the home seller spread the payments over a 10 to 15 year period. The interest on the note should be the current market rate or better. If these guidelines are followed this would make an ideal mortgage and note. Buyers everywhere would gladly buy this one. The home seller would have no trouble selling this deal.

DO YOU SEE HOW SIMPLE THIS IS?

Our seller needs to be cashed out. In order to get the highest cash figure for the seller, you simply suggest figures that would give the mortgage high resale value. Just remember, high value mortgages always have -- strong down payments, short pay back terms, market interest rates, and their secured by single family homes.

Obviously, the home seller may not end up with the same figures you suggest. Market conditions and buyer needs have to be considered. For example, perhaps the home buyer needs a monthly payment they can afford. The short term pay back of 10 to 15 years produces too big a monthly payment. The thing to do is spread deal over 20 or 30 years and place a 10 year balloon payment in the tenth year. This makes the payment affordable for the buyer, and the mortgage still has high resale value with a short term pay back. The most important thing to remember is you're giving the home seller good solid financial guidelines they can use to make their own choices. Based on your suggestions they usually end up with a nice deal you can work with. Now, lets do another example.

EXAMPLE TWO

Lets use the same house selling for $125,000.00. In talking with the home sellers you discover they don't need all cash. Their buying a new home and they need $50,000 for a down payment. I would suggest you use the same figures like we used in the first example. 10 to 20 percent down. 10 to 15 year payback, or 20 to 30 year payback with a 10 year balloon. When the sale on the home closes I would offer to buy part of the payments. The amount I offer for the payments, plus the figure the sellers get from the down payment easily produces the $50,000 in cash they need. Of course, the marvelous thing is after I've received all the payments I've bought the right to, I return the mortgage and note back to the seller and they start to collect on it. Home seller's love this option and are very open to this type of deal when all cash is not needed.

EXAMPLE THREE

Lets assume the mortgage and note the sellers create have the same terms again just like both examples. This time the home seller tells you they need $60,000 in cash, and they also need some monthly income. This is easily solved by offering to buy half of each monthy payment. If the payment on the note is $800.00 a month, you divide it in two. The home seller gets $400.00 and you get $400.00 for the life of the mortgage. The amount you pay the sellers for the payments, plus the down payment they receive from the home buyer easily goes well over the $60,000 they need. And, they still get $400.00 a month. Again, this option can be very popular with home seller's who don't need all cash.

EXAMPLE FOUR

Lets say we have a deal that's not quite as good. The home seller is selling their house for $100,000.00. The best they can do is find a buyer who will put down $7,000.00 cash. The buyer needs to have a pay back term of 30 years to make the payment affordable. In talking with the seller you determine they want all cash -- but they really don't need it. I suggest the seller go ahead and set the deal up for a 30 year pay back term. Place a balloon payment in the tenth year of the mortgage. This gives the deal a short pay back term. Even though the down payment is not the best you could give the seller a choice of two different offers. The first offer would be to buy the payments only and the seller keeps the balloon payment for themselves. The second offer would be one lump sum of cash for the whole mortgage. The down payment is weak on this one but a carefully placed balloon payment in the mortgage will sweeten the deal up beautifully. You could easily sell any one of these four examples to a funding source and make a quick profit. When you're explaining owner financing, always keep in mind the vision of a quality mortgage and note. Then suggest options based on the needs of your home seller.

Seller Financing in Home Sales

Seller financing -- when the seller gives the buyer a mortgage -- can help both home buyers and sellers.

Seller financing -- when the seller of a home takes on the role of lender in a home sale -- can help both sellers and buyers in a tight credit market.With seller financing, sellers may move a home faster in a slow market and get a sizable return on the investment. And buyers may benefit from less stringent qualifying and down payment requirements, more flexible rates, and better loan terms on a home that otherwise might be out of reach. There's a greater chance of finding sellers willing to take on the role of financier in a slow market, but they still represent only a small fraction of all sellers -- less than 10%. That's because the deal is not without legal, financial, and logistical hurdles. But by taking the right precautions and getting professional help, sellers can reduce the risks inherent in seller financing.

How Does Seller Financing Work?

In seller financing, the seller takes on the role of the lender. Instead of giving cash to the buyer, the seller extends enough credit to the buyer for the purchase price of the home, minus any down payment. The buyer and seller sign a promissory note (which contains the terms of the loan), they record a mortgage (or "deed of trust" in some states) with the local public records authority, and then the buyer pays back the loan, typically with interest.

These loans are often short term -- for example, amortized over 30 years but with a balloon payment due in five years. The theory is that within a few years the buyer will have gained enough appreciation to refinance, interest rates will be more favorable, or other conditions will emerge to allow the buyer to get institutional financing. From the seller's standpoint, the short time period is also pragmatic -- sellers don't have the life expectancy of a mortgage lending institution. In addition, sellers don't want to be exposed to the risks of extending credit longer than necessary. A seller has the best chance of getting a seller financing deal when the home is free-and-clear of a mortgage -- that is, when the seller's own mortgage is paid off. If the seller still has a mortgage on the property, the seller's existing lender must agree to the transaction, and in a tight credit market, risk-averse lenders may not be willing to take on that extra risk.

Types of Seller Financing Arrangements.
Here's a quick look at some of the most common types of seller financing.

All inclusive mortgage

In an all-inclusive mortgage or all-inclusive trust deed (AITD), the seller carries the promissory note and mortgage for the entire balance of the home price, less any down payment.

Junior mortgage

In today's market, lenders are reluctant to finance more than 80% of a home's value. Sellers can extend credit to buyers to make up the difference: The seller can carry a second or "junior" mortgage for the balance of the purchase price, less any down payment. In this case, the seller immediately gets the proceeds from the first mortgage from the buyer's first mortgage lender. However, the seller's risk in carrying a second mortgage is that he or she accepts a lower priority should the borrower default. In a foreclosure or repossession, the seller's second, or junior, mortgage is paid only after the first mortgage lender is paid off and only if there are sufficient proceeds from the sale.

Land contract

Land contracts don't pass title to the buyer, but give the buyer "equitable title," a temporarily shared ownership. The buyer makes payments to the seller and after the final payment or payoff, the buyer gets the deed.

Lease purchase or lease option

The seller gives the buyer equitable title and leases the property to the buyer for a contracted term. When the buyer fulfills the lease purchase agreement, the buyer receives title and typically obtains a loan to pay the seller. Some or all of the rental payments can be credited against the purchase price. Numerous variations exist on lease options.

Assumable mortgage

Assumable mortgages allow the buyer to take the seller's place on the existing mortgage. Some FHA and VA loans, as well as conventional adjustable mortgage rate (ARM) loans are assumable -- with the bank's approval.

Getting Professional Help

Both the buyer and seller will likely need an attorney or a real estate agent -- perhaps both -- or some other qualified professional experienced in seller financing and home transactions to write up the contract for the sale of the property, the promissory note, and any other necessary paperwork. In addition, reporting and paying taxes on a seller-financed deal can be complicated. The seller may need a financial or tax expert to provide advice and assistance.

Tips to Reduce the Seller's Risk

Many sellers are reluctant to underwrite a mortgage because they fear that the buyer will default (that is, not make the loan payments). But the seller can take steps to reduce the risk of default. A good professional can help the seller do the following:

Get a loan application. The seller should obtain a loan application from the buyer and thoroughly verify all the information. That includes running a credit check and vetting employment, assets, financial claims, references, and other background information and documentation.

Allow for seller approval of the buyer's finances

The written sales contract -- which specifies the terms of the deal along with the loan amount, interest rate, and term -- should be contingent upon the seller's approval of the buyer's financial situation. Have the loan secured by the home. The loan should be secured by the property so the seller (lender) can foreclose if the buyer defaults. The home should be properly appraised at a value equal to or higher than the purchase price.

Get a down payment

Institutional lenders ask for down payments to give themselves a cushion against the risk of losing the investment. It also gives the buyer a stake in the property and makes them less likely to walk away at the first sign of financial trouble. Sellers should do likewise and collect at least 10% of the purchase price. Otherwise, in a soft and falling market, foreclosure could leave the seller with a home that can't be sold to cover all the costs.

Negotiating the Loan

As with a conventional mortgage, seller financing is negotiable. To come up with an interest rate, compare current rates that are not specific to individual lenders. Use services like www.BankRate.com and www.HSH.com -- check for daily and weekly rates in the area of the property, not national rates. The seller should also consider getting professional help in order to set the interest rate. Be prepared to offer a competitive rate, low initial payments, and other concessions to lure buyers. Because sellers typically don't charge buyers points (each point is 1% of the loan amount), commissions, yield spread premiums, and other mortgage costs, they often can afford to give a buyer a better financing deal than the bank. They can also offer less stringent qualifying criteria and down payment allowances.

That doesn't mean the seller must or should bow to a buyer's every whim. The seller also has a right to decent return. A favorable mortgage that comes with few costs and lower monthly payments should translate into a fair market value for the home.

Hiring a Loan Servicing Company To help ease the paperwork burden, sellers can hire a loan servicing company to help draw up the mortgage, mail statements, collect payments, and otherwise administer the mortgage. Another option is using a company like www.VirginMoneyUS.com (formerly Circle Lending), which specializes in facilitating loans between private parties. It will prepare the loan documentation, record the mortgage, develop the payment schedule, set up automatic payments, and provide year-end reporting, credit reporting services, and collection procedures, along with a whole host of other related services.

How To Calculate Equity and LTV In A Mortgage Note

This will be short and sweet. Let's say you have a 1st position mortgage note and you want to figure out the most important characteristic of all - equity. This is the very first thing any note buyer looks at when deciding if they want to spend their hard-earned cash on a note (business note or mortgage note). The example note we'll use has a sales price was $157,000 with a down payment of $37,000. You definitely need to know these two bits of info in order to figure out the mortgage asset's equity (and LTV which we will talk about below).Simply divide the down payment into the sales price. In the above example it would look like this:

$37,000/$157,000 = 0.24 (aka 24%)

Anything after the decimal point (.) is the answer or the equity in the property. LTV comes into play as well. To figure out the LTV after figuring out the equity simply subtract the equity amount (24%) from the number 100. The number 100 (or 100%) never changes. It's always 100... So it would look like this:

24% - 100% = 76% (aka 76% LTV)

Keep in mind: you always use the down payment first in the calculation or else you will get the wrong answer. Down payment first, sale price second. Its that simple. Also, you can use a regular calculator. You do not need a financial calculator to figure out equity or LTV, but I suggest always using a financial calculator when dealing in mortgages - period!

Now you know how to figure out the equity in a property securing a mortgage note and you know how to figure out the LTV or Loan-To-Value as well. Good Luck...

Tips For Note Sellers When Structuring A Mortgage Note

If there is one thing that any note seller (or note broker working with a new note seller) should do before creating a new mortgage note is - collecting a down payment at the loan's origination. This is by far one of the most common mistakes I see among notes posted for sale. NO DOWN PAYMENT (or a down payment lower than 10%). This is a surefire way to lose money (big-time) when selling a note on the secondary mortgage market.

A seller should ALWAYS collect a 10% down payment, or more if they plan on selling their mortgage note to a note buyer - period. If this is not done, the only 2 options the seller will have is:

A) Partial Purchase Sale (selling only a portion of the monthly payments to a note buyer for a lesser amount)

B) Not selling the note at all.

If you do find a note buyer to buy the note with less than 10% in equity, the note seller will receive a hefty discount. Something a little foresight could have cured.

So, if you or your seller is planning on carrying paper on a property sale now or later, always get money down if you plan on selling the note to a note buyer. In addition, if you want to receive the absolute most for the note on the secondary market, collect at least a 20% to 50% down payment.

What if I wanted to invest my money in real estate paper? What's the deal?

Not many investments can dependably generate such high yields. And few other investments have an asset like real estate as a “backstop” providing a well protected downside risk. Mortgage investing is an attractive alternative to the stock market for many. Please note that this is not a get rich quick type of investment. However, investors can put money to work in a relatively safe high yield investment with an expected return of up to 10%-17% percent on average. The biggest challenge with mortgage loans is finding a source. Whether real estate note investments are right for you will depend upon your time frame, your risk/reward expectations and your anticipated need for liquidity. Furthermore, real estate notes have stable returns and fit well within a portfolio of stocks, bonds and real estate. Adding these to a portfolio can make the returns of the total portfolio more consistent. When evaluating any potential investment opportunity, the advice of a professional investment advisor is helpful in assessing the potential rewards and potential risks.

Calculating A Mortgage Note's Value

In this post I will discuss how to calculate a mortgage note without the help of the note buyer. This way you can add value to your note brokering services, justify your fee to the seller, and speed up the process when trying to close a note seller. I feel every person that is serious about becoming a note broker should have detailed knowledge of appraising a mortgage note.

1. The price a note buyer will offer for a mortgage note—and the amount by which it will be discounted-- is determined by the spread between the investor's required yield and the interest rate on the note itself.

2. Generally speaking, the higher the interest rate on the note the lower the discount. The reason most notes are discounted is simply because investors' required yields (typically in the 12%, 15%, 20% or more range) are almost always higher than notes' interest rates (usually in the 5% to 10% range); the greater the spread the bigger the discount.

3. The interest rate on your note is given. The variable is the note buyer's required yield, and that is influenced by 2 factors: first, the buyer's cost of money and his other operating costs; second, the note's inherent risks and likelihood of the property going into foreclosure with the buyer bearing all the related costs. Risk is the big factor in determining what yield the buyer will require. And the main risk factors the buyer looks at are down payment and payer's equity in the property, payer's on-time payment record, payer's credit rating, and loan term (balloon or not and how far out).

4. What are reasonable expectations? That a “good note” can command close to the current principal balance of the note—possibly even a premium for an “exceptional” note? Yes. That a “problem” note is going to be discounted by some amount—not too much for small problems, and steep discounts for notes with serious problems? Yes again.

5. Here are some ballpark parameters on "good", "bad" and "average" notes:

A GOOD note—where buyer might pay 90% or more of current principal balance—would likely have 20% or more down payment, 70% or lower loan-to-value, a 9 % or higher interest rate, a 5 year balloon with a 30 year amortization schedule, payer with a solid on-time payment record, 700 or higher credit score. Buyer might peg a 12% yield on this note given the low risk of default; this in turn would produce a relatively narrow 3 percentage point spread between the buyer's 12% required yield and the note's 9% interest rate.

A BAD note—where buyer would likely pay 70% or less of current principal balance--might have 5% down, 90% or higher loan-to-value, a 5% interest rate, no balloon, iffy payment record, 600 credit score. Buyer might require an 18% yield on this note because of the significantly higher risk of default and foreclosure, thus producing a 13 percentage point spread between his 18% required yield and the note's 5% interest rate.

MOST NOTES fall somewhere in between these two extremes with buyers paying 80 to 85% of a note’s principal balance.

FYI: Every note buyer has a different investment appetite which means your bids may vary between buyers in the same market. There is no Fair Market Value for notes as there is for real estate. The note's worth is always calculated on a case by case basis.

How Individuals Can Use Their Cash Flow Instruments to Repair Their Credit Score?

have come across this question more than once. Many Americans are in a credit slump although, if you are collecting monthly payments on a Note, Structured Settlement, or Business Receivable Invoices, there is a simple way to combat this problem effectively.

Your cash flow could easily be sold on the open market to an Note Investor for a lump sum of cash, instead of collecting payments little by little over time and drawing out your high interest period. By cashing out you note (or any other type of cash flow), you could resolve any credit problems you may have, and pay down those high interest credit cards, auto loans, or any other problematic existing credit account. Credit issues can be very costly if you pay a debt consolidation company or an attorney to assist you. That's why I found, spending many years helping people with credit (obtaining mortgage loans) that
Self Credit Repair E-Books Kits are very helpful in this arena as well. The credit law changes so frequently that an E-Books easily constantly updated. This way, you leave no room for indirect unintentional credit errors.

Cashing in that Real Estate Paper to Grow Your Finances

Many smaller real estate investors are thinking twice before buying that fixer-upper due to the current crippling real estate market trends. And it is understandable as well. But what are the alternatives? Well, that depends on the assets available to the investor.

Lets suppose that you are carrying paper from a previous real estate sale commercial or residential (created a mortgage note or a promise to pay secured by a deed of trust or mortgage contract). I would imagine that there are a lot of investors out there that were planning on selling a renovated property and might ran into problems due to local trends. Investors that are recipients of private mortgage payments, may want to consider selling the paper instead of borrowing from a bank. This way you can receive capital for you next investment with out borrowing and creating unwanted debt.

Selling your note versus borrowing from a bank. Which one gives me the advantage?

Even though you won’t get the full value of your contract, a cash flow note sale is still more profitable. There is a concept called the time value of money, which says that your money’s present value is always more than its future value. This is because you can invest your money now and start earning interest. By the time the note is paid in full, you would have earned the difference with your investment – and with much less risk. A cash flow notes sale can also be more convenient than a bank loan. You can sell your note in two weeks or less, while a bank will make you wait up to a month as they review your case, assess your credit, and do a dozen other checks. Of course, there will be no obligations either, since you will be selling, not borrowing.

How does the private mortgage sector work?

Navigating the Private (Secondary) Mortgage Sector is definitely not the same and/or as common as the Primary Mortgage Market. There is very few in the real estate industry that specializes in this arena efficiently. In the private industry, cash flow specialists are not originating mortgages and dealing with banks and lenders to get you the lowest interest rate possible. Nor are they purchasing real estate in the traditional sense. They are brokering mortgages from existing owner-financed mortgage holders who “need” or “desire” cash immediately. These opportunities are attractive to investors that want the high yield, minimal overhead and monthly income stream. There is an additional advantageous security, due to the fact that the investment is secured by real estate.

If you wish to sell your mortgage note for a lump sum of cash, please feel free to click links at the top of this page to learn how easy it is to convert paper to cash.

Note Broker Business Plan Summary - Part 1

I am going to be expanded on what is missing from most new note broker's strategies - a note broker business plan! This 2 part series is going to consist of 4 elements of the new note broker's business plan:

A) Knowing Your Business

B) Identifying Your Target Market

C) Building Your Note Buyer List

D) Advertising Strategy

Keep in mind that this is the most over-looked aspect of a new note broker's business strategy - a note broker's business plan hands down. Just a couple of keystone tweaks and your on you way to seeing some real cash as a note broker! Now in this post I am going to discuss the first two tactics above (A & B) and in a later post I will conclude with the last two tactics (C & D). Let's get started...

A) Know The Mortgage Note Business

From my personal experience as a note broker and a note buyer, I know for a fact that most new note brokers are not well versed in the secondary mortgage market, at all - which is their first mistake. Easily overcome this by spending about 20-50 minutes a week online checking on your note broker competition (via a Google search) which may have secondary mortgage market news and material on their site. You can also start calling around to title/escrow companies which are always involved with these types of transactions; maybe they can tell you a thing or two about the secondary note market in their area - whats selling whats not, etc (get creative).

Also stay in touch with the national real estate and primary mortgage market news too. This will severe a duel purpose, as it is always wise to utilize national financial news and incorporate it into your note seller "pitch" to convince the seller that selling their note NOW is wise in this economy because... etc, etc, etc. Also, this is a useful tactic when overcoming any other off-the-wall note seller objections during your pitch. These are simple tactics I used, and still do to this day.

B) Identify Your Note Seller Target Market

This is a KEYSTONE ingredient , especially for this industry. Why? Because new note finders are not going to waltz in to this sector and start trying to compete with large banks and institutional buyers. In addition, the average new note broker is most likely have little to no financial experience or background - whatsoever. Within the first 10 seconds of a conversation between a new note broker (with limited to no understanding of what their objectives are, besides to make a commission), and an experienced note buyer/note trader or bank, they will be able to see right through the "new" note broker and most likely end contact right then and there. I am sure some of you reading this may have experienced this first hand. Please understand that I am only referring to the trading of bank-owned or institutional mortgage notes; everything else is fair game. I can tell you we (our outfit) does not deal with brokers that are under-prepared or completely mortgage illiterate. We have been burned to many times by less than truthful inexperienced note brokers - and that's exactly why most (not all) institutional agents (banks, hedge funds, etc) will not work with independent unlicensed note brokers. The Solution...target the private note sector! Burn that into your memory...target the private note sector! This consists of notes created by private individuals or private small to mid-level market businesses (businesses that gross between $1MM and $50MM per/year in sales). This is the perfect target for new note finders and the only way to turn a decent profit with little viable competition. I say viable because most note brokers have no idea what they are doing. Now understand, once you find the mortgage note for sale in the private sector, you can filter it down through your note buyer list, which will contain banks and other institutional agents. That's OK. Selling a private mortgage note or portfolio to institutional buyers is fine - most will buy private notes at a discount their willing to pay, as long as they are presented professionally.

Back to the target market - simply target:

1) private individuals (seller carry-back notes)
2) small businesses ($1MM to $25MM p/y in sales)
3)mid-level market businesses ($25MM to $50MM p/y in sales)

What type of businesses? Try bail bonds, single family home construction companies, real estate developers, real estate management companies, etc. Any business that may create a mortgage note. Also, don't forget what I said about title/escrow companies - they're goldmines if used correctly. Remember be professional, be prepared and most importantly be polite, and you should do just fine. Research these target groups at your local courthouses and online (some courthouse databases are now online as well). Look for notes (individual or commercial) created in the past 1 to 36 months with a Grantor/Holder as a Business or Person - NOT A BANK! Once you find them you send your advertising material to the address of the receiver of the mortgage payments.

Note Broker Business Plan Summary - Part 2

As promised, I am going to conclude the note broker business plan so, all of you newer note brokers - listen up! For everyone else, in Note Broker Business Plan part one we reviewed A) Knowing Your Business and B) Identifying Your Target Market. So, now lets talk about:

C) Build Mortgage Note Buyer List

This I can only touch on lightly. I'm not giving away the farm in this post. I will say that RW'S Cash 4/Note Service is a purchaser of 1st position mortgage notes secured by residential zoned land or Single-Fam or Multi-Fam real estate. I will also tell you that RW'S will only directly buy A+ paper - 650 FICO mid score or higher, at least 20% hard-equity and the property must be located in an approved state:

Oregon
Washington State
Florida
Texas
Georgia
Ohio (select)
Indiana (select)
North Carolina
South Carolina
All of New England
New York
New Jersey
Pennsylvania
Virginia
Maryland

Just to name a few:

As far as other reliable note buyers I would suggest building your note buyer list using several tactics. Research and contact community/national banks (via a Google search) that would be willing to buy existing privately held mortgage notes or simply call banks out of your phone book. If they are willing, find out their purchase criteria (which can easily be sent via an email (usually but this may vary). Another tactic is that once you have a solid note deal in-hand (which means a signed note seller commitment letter on a negotiated purchase price, subject to buyer approval), locate an experienced note broker that would be willing to work with you on closing this deal and giving you a commission. Only, give the experienced broker the mortgage details (not the seller's info or street address {city and state are OK}) so the broker can confirm the note is a winner (THIS IS KEY). Once they see that it is a winner then and only then do this next step...Let them know that the only way you will refer this note to them is if they tell you who the note buyer is so you know for your future deals. Tell them this is a one-time thing. This way you commission will go up substantially in the future dealing directly with the buyer. But, more then some experienced brokers wouldn't agree to this, so you will have t be patient on this one. Once you find an experienced broker that agrees (because they want the commission) this is a surefire way to build your note buyer list fast.

This tactic will not work unless you have a marketable and profitable note for sale (do not try this with just any mortgage note without researching and doing the math first!). For you folks that are articulate and writer-savvy, I would suggest recruiting private mortgage note investors via financial publications such as the Wall Street Journal, or Money Magazine or Entrepreneur Magazine for starters. You better be ready to spend some money with the big boys like the publications I just mentioned, but you can also go local too (cheaper). Research the area you were planning to target for your note broker advertising campaign and see if there is a local financial publication, business publication or even a publication for attorneys. I am sure in you research you're bound to run into one of the above mention platforms. Think outside the box!

D) Note Broker Advertising Strategy

This is an easy one for new note brokers on a budget. When advertising to individuals the best and cheapest thing to do in a postcard mailing campaign. Simply create or outsource the creation of a post card that tells any and all private note holders what you offer. Let them know that you can get them cash for their mortgage instrument today instead of waiting for it to mature. With a post card they have to read it no matter what. A letter will just get thrown away (unless they're hand written envelopes - which is very time consuming). Beware - postcards only work for private citizens holding a private mortgage note, not businesses! Small and mid-level market businesses are a little different. They require more work. If your up to going for the businesses as well, you would need to create an intro letter (professional only), a info pamphlet (hard-copy or PDF file) or a power-point presentation at least. Businesses need to be WOW'ed. That's why if your new to this industry, I would stick with private individuals until you close some deals and make some money. Once you get the budget, I would hire/outsource the work (Elance.com is a good resource). This way you can hit-up the businesses for their mortgage paper. Once the snowball gets going it could equal big $$$$...

After creating a seller carry-back mortgage note, how do you know if it will sell?

This is the big question among a lot of potential mortgage sellers I have spoken to over the past half decade. After creating a seller carry-back mortgage note, how do you know if it will sell? Only 5% - 7% of the millions of seller carry-back mortgage notes created every year, are marketable. To clarify, marketable meaning - attractive for an investor to purchase for their portfolio at a discount. Lets look at this further, shall we?

When creating a note please keep several things in mind.

A) Always create a mortgage note with an attractive interest rate. Keep in mind that you should base your rate comparable or slightly higher then the average bank or lender. Why? In order for a mortgage to be considered for purchase by most note buyers/investors, the investment/mortgage note must to have a decent rate of return. This rate should be determined by the borrowers credit score (which could easily be accessed by the borrower through http://www.freecreditreport.com/ . This generally will ensure a marketable mortgage note as an end result.

B) If using a balloon payment, make sure the property is approved for refinance by a licensed lending source or bank. If you are thinking of including a 5 or 10 year balloon over a 30 amort schedule (5/10 over 30), make sure that the borrower will be able to follow through with such a commitment. For example, it would not be wise to create a mortgage note on bare land (no structure on property), and expect the borrower to refinance down the road to pay off the balloon and in turn the loan. It won't happen. No one will refinance bare land. 99.9% of the time. It must be a single family, mutil-family or commercial structure on the property in order to refinance. I have seen this mistake many times in the secondary mortgage market.

The above information is simply a guide to creating a marketable mortgage note. It is always recommended to speak to an attorney or licensed mortgage professional to discuss in detail, the mortgage origination laws in your state or the state the subject property is located.

3 Things You Should Do When Using Seller Financing

I run into these 3 problems all the time that I think I should address. Some note sellers do not consider selling their mortgage note on the secondary market before or after the loan is originated. They simply create a note without consulting a lawyer, mortgage broker, or any other financial professional - and that's where they go wrong. When creating a seller-carry-back mortgage note or small business note, it would be wise to follow these 3 steps...

1) Always Consider and Pull A Buyers Credit Report: If the seller skips this step they are definitely asking for trouble down the road. Pulling a buyer credit report at the time of sale would give the seller a detailed idea of the buyer's payment habits and over all financial lifestyle (including employment), which would allow the seller to off-set some risk by being well informed.

In addition, having the foresight to see if the buyer has some negative credit would save you thousands of dollars when selling a mortgage note to a note buyer. Be sure to get the buyer's full name, current address, date of birth and social security number (keep in mind that the seller needs this info anyway - for the IRS tax forms). After the property/business is sold, the seller/beneficiary should simply keep the buyer's credit report of file, so they have it for the note buyer if and when they liquidate the mortgage asset.

2) Never Go With a Straight 30 Year Loan Without A Balloon: If the seller writes a loan for 30 years, the loan will suffer a steeper discount with a note buyer. The reason being is that a lot can happen in 30 years, which is a very long time for anyone to wait for a return on investment. Unless you do not plan on ever selling the note, do not do a straight 30 year loan with no balloon. The seller should always include a 5, 7 or even 10 year balloon so the note would A) sell for more on the secondary mortgage market and B) increase capital to the seller. A note buyer usually likes to be out of an investment within 5-10 years (generally speaking, depending on the note buyer's investment appetite). That doesn't mean that the buyer cannot benefit from a loan that is stretched-out or amortized over 30 years. Simply amortize the loan for 30 years and add a balloon. Keep in mind that the seller can always extend the balloon date if something were to occur with the buyer/borrower's finances down the road. This way the seller can keep their options open. Also the mortgage instrument will fetch more with a note buyer which can save the note seller thousands of dollars as well.

3) Charge a Premium Interest Rate: When structuring a mortgage note for resale, always, always charge 2%-4% higher than a bank or lender. Think about this, the seller is offering a huge service by carrying the paper and offering the financing to the buyer on a transaction, which comes at a cost to the buyer/borrower (like anything else), a higher interest rate. Also, the higher the rate, the more the note will sell for if and when the beneficiary decides to sell to a note buyer.

What is a Partial Purchase?

A partial purchase or a "partial" allows an interested party to buy or sell only part of a note. This maneuver is a transaction in which the owner of a private mortgage note sells, and a buyer purchases, less than the entire indebtedness owned by the seller. Using this "partial purchase" technique private mortgage sellers and investors can have their cake and eat it too. Lets say a note holder/seller needs cash now for a new home down payment. He has a monthly cash stream ("holding paper" from his last real estate sale) $537.30 for the next 15 years on a note created with a face value of $50,000.00 which is fully amortized at 10% interest. He does not want to sell the whole note due to the fact that his child will be starting college in 5 years and he was counting on using that paper assest to fund an education.

One of many options (or many types of partial purchases) is selling half of his monthly payments for a lump sum today, and retaining the remainder of the note for his financial needs and added security in the future. He still will have 268.65 for the next 15 years or 180 months which values at: $48,357.00 ($268.65 x 180 = $48,357.00), plus he has the lump sum of money (from the "partial" sale of his note) that he needs now. Pretty amazing!

Being Prepared When Structuring Your Mortgage Note For Resale.

I have come across many note sellers that ignore the advice of being prepared. Properly structuring a note for resale can be the difference between selling the note fast and with little friction as opposed to selling yourself short or worse, not selling the note at all. In order to properly structure a mortgage note for resale is as follows:

1) Get the biggest down payment possible. 25% is the Note Buyer's ideal amount in a perfect world although, you can definitely get away with 15% - 20% if need be. Anything under 15% equity becomes very risky for a Note Investor. In the case of a down payment under 14% equity, you will have a very tough time getting a high bid on that note. Anything under 10% down, will unlikely sell at all.

2) Make sure you (the seller), pull credit on the potential borrower. 600 FICO score - 700 FICO score would be ideal. Remember; the worse the credit score is, the bigger the down payment you should require! Make sure you keep a copy of the credit report so you may present to the mortgage note investor underwriting the transaction. As far as credit scores, 650 or higher is considered great to excellent credit. 610-649 is good, 609-590 is fair 589-500 is poor and below 500 - don't even bother. Also try to gather D.T.I. or Debt to Income information from the borrower as well. How much money she/he has coming in per month verses what dollar amount is going out per month. A standard credit report will show you what the borrowers monthly bills are. All you need to do after that is get an accurate dollar amount of what the borrower truly makes after taxes. This way there will be no surprises for you or the Note Investor and this will insure you the highest bids out there! 45% is the max D.T.I. ratio you should allow. This means, if the borrower's income is $5,000.00 per month, 45% DTI ratio would be $2,250.00 (5,000 x 0.45 = 2,250.00) in debt per month. The borrower only owes 45% of what they make to monthly debt.

3) It helps tremendously if the seller orders and completes an appraisal before submitting the note to a Note Buyer. The reason being, presenting an exact legal appraisal to a Note Investor allows for a more accurate bid, thus a hassle free tranaction. This way when the note is underwritten, there will be no surprises on the collateral property whatsoever. This step is not nesessary although, by doing this your are drasticly increasing your chances of a very smooth note sale.

4) Include a high interest rate with the shortest term possible. Meaning, be sure that your borrower can afford the payments at the shortest term she/he can legitimately agree to.

5) Try to keep the loan under a 10-15 year payback date. Anything over 12 years usually takes a much steeper discount then say a 10 balloon. The Note Investor generally likes to be out of an investment in 5-10 years. Ideally, if your borrower situation permits, 5-10 is the first choice.

6) Include a prepayment penalty based on your states regulations and laws.
Please keep in mind; the above information is just a guide. If you have any legal questions about mortgage origination laws in your state, please consult an licensed mortgage broker/banker (in your state) or an attorney. All ways be prepared!
Knowing this info before hand is the difference between a smooth transaction and a complete nightmare! Good Luck!

How is a realestate note appraised?

It's a two fold process. The first part is to evaluate the risk associated with the note. This is accomplished by collecting a variety of data about the note, ie. property type, property location, buyer's equity, credit and payment history as well as the interest rate, payment amount and term of the note. The second part is applying an investor yield requirement associated with the level of risk in the "subject" note.

RW's Ca$h 4/Note, LLC.

We Buy over 50 kinds of notes in all 50 States .