Advantages and Disadvantages of Selling a Mortgage Note vs. Holding The Note

Published: 19th December 2008
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In today's volatile economy, many note holders are seriously evaluating whether to sell their mortgage note or not. So what are the advantages and disadvantages? Let's start with the disadvantages.

Disadvantages of Selling a Mortgage Note:

1. First and most obvious, once you sell your note your monthly income is gone forever.
2. If you had a significant gain on the sale of the home that you have spread over the life of the note, you may have to show all of the remaining gain once the note is sold. (Consult your tax adviser.)
3. You will take a discount on the remaining note balance due to the time value of money.

Advantages of Selling a Mortgage Note:
1. You receive a significant lump sum of cash, usually quite quickly.
2. You can utilize this cash for lucrative business opportunities or just as a cushion for these tough economic times to ease anxieties.
3. You no longer are at risk of a default on the note and the hassles of a foreclosure.
4. You no longer have to worry about whether the mortgagor has paid their property taxes or maintained the home.
5. You don't have to keep monitoring the tax office to see whether the mortgagor has any new liens on the property from a second mortgage or federal or state taxes, etc.
6. Lastly, you no longer have to keep detailed records on the mortgagor's payment history or report interest to the federal and state tax authorities.

Well there you have it, the pros and cons of selling a mortgage note. Good luck with your decision.

George R (Ron) Stone has a note buying business. His company buys mortgage notes and help home sellers offer owner financing to sell their home fast and for top dollar while selling the private mortgage note at a simultaneous closing. Learn more about note buying and selling at Mortgage Buyer

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