Do you dream of owning a home but feel overwhelmed by getting a mortgage through a bank? Or are you a property owner who wants to sell quickly without the bank’s lengthy processes? Owner-financed mortgage notes are a simple and powerful way for buyers and sellers to realize their real estate dreams.
The following is an easy guide for understanding owner-financed mortgage notes.
What is an Owner-Financed Mortgage Note?
In real estate, an owner-financed mortgage note is when the seller takes the role of the bank for the buyer. Both parties agree upon terms such as downpayment, interest rate, payments, and specified time of payoff. This arrangement is also known as a mortgage note, contract for deed, deed of trust, or trust deed.
Example
Imagine you want to buy a candy store! However, you do not have sufficient funds to pay cash, and the bank denies your loan application. The owner of the candy store offers a solution by allowing you to pay direct and workable monthly payments with certain terms until you pay for the store in full. This deal between you and the seller would be an owner-financed mortgage note.
Benefits
Owner-financed mortgage notes allow buyers to invest in property while avoiding the traditional processes of a bank loan. This is especially beneficial when the buyer cannot secure a bank loan, or the seller prefers to manage the purchase.
Why Sell an Owner-Financed Mortgage Note?
You may wonder why anyone would want to sell their owner-financed mortgage note later. Well, it is like having a big jar of cookies. Each cookie stands for a payment from the buyer, and the seller takes one from the jar every month. Why sell the whole jar? The appeal is immediate cash!
Here is a real-life story from American Equity Funding to illustrate the advantage of selling an owner-financed mortgage note:
A lady sold a house using an owner-financed mortgage note which meant she was receiving monthly payments over a lengthy time. She had ambitions of moving to another country and starting her own business. However, her big dream needed something important. A lump sum of immediate cash!
Waiting twenty years to collect the money would not realize her goals, so she decided to sell her owner-financed mortgage note (the whole jar of cookies). This gave her the funds she needed to fulfill her wishes without delay.
The gain of selling an owner-financed mortgage note is a lump sum of immediate cash for life events such as significant expenses, new investment opportunities, or fulfilling lifelong dreams.
Advantages of Buying and Selling Owner-Financed Mortgage Notes
Owner-financed mortgage notes offer opportunities for both buyers and sellers. Buyers who might not qualify for traditional loans can own real estate. Likewise, sellers can often close on property quickly without the strict requirements that banks impose. This method is a win-win situation for both parties.
Selling an owner-financed mortgage note later provides flexibility and immediate funds as life circumstances change, dreams expand, or financial needs evolve.
In Conclusion
For those buying real estate, owner-financed mortgage notes create opportunities for ownership that bypass traditional banking hurdles. Selling an owner-financed mortgage note is a quick way to access a considerable sum of money.
Whether buying or selling an owner-financed mortgage note, understanding your options is the first step towards making informed and life-changing financial decisions.
American Equity Funding has extensive knowledge and experience in owner-financed mortgage notes with an A+ Better Business Bureau rating. We welcome all inquiries!
American Equity Funding
479-650-1488
www.americanequityfunding.com