KNOW WHEN TO SELL YOUR NOTE

The old adage of knowing when to hold and knowing when to fold is even more true when it comes to selling your mortgage note. In fact, there are a huge number of perspective sellers who have no idea that they haven’t got to sell the total today, and we’re finding more and more advantages associated with holding/retaining part of your note.

When it comes to your mortgage note, sometimes it just doesn’t make sense to sell the whole thing, or it’s just not a viable, safe option. It’s important to realize that your home is your biggest investment, and as such, when you’re not able to sell your note at the price that you want, you’re set to lose a sizable chunk of money via your houses depreciation values. More often than not, because of the diminishing rates of return on homes, most buyers will only purchase full notes with large amounts of equity.

You’ll have your work cut out for you to determine how to best interest a potential buyer to determine the value of your home (through a loan to value ratio or LTV). This works by simply dividing what your note is worth by the value of the property. When you’re unsure, use your sales price as an estimate to get a ball park estimate.

Here’s an easy example of a loan to value ratio equation:

Your Property Value: $200,000/ Your Remaining Balance: $100,000 = LTV of 50%

When it comes down to a small number like the one above, you’ll have a great chance to sell the property. Most buyers will purchase a full when the LTV when the value is below 70% of the value. Most are looking for at least a 30% equity margin, proving that you’re invested in your home to use against the risk of foreclosure.

When it comes down to it, generally your mortgage notes fall well short of equity requirements, and therefore aren’t complete to sell. When you’ve got a particularly high LTV, your rate of return isn’t going to make you much money- which is when selling a partial is more important.

We’ve compiled a few Pros and Cons to help you make your decision:

Pros

• More cash in your pocket, and freedom from your note requirements
• No risk of default to the bank, giving you less management on your mortgage
• Easiest transaction process imaginable

Cons

• Bigger Discount on property value levels
• You’ll lose property retention opportunities
• Lost income, and the costs of lost interest
• Sometimes you’ll face equity restrictions

While it might not make sense to sell your whole full mortgage, it often makes more sense to use a smaller amount of cash to pay off a big bill (i.e. taxes, car payments, deferments) when you don’t want to take all of the cash out of your note, or only want to retain enough of the income to get a little cash today.

Many sellers don’t need to sell the whole note, and understand that buying partials benefits them more in the long run, so many sellers will be interested your note when you’re selling a partial for a little extra pocket cash.

http://nationwidesecuredcapital.com/Sell-My-Note/know-when-to-sell-your-note/