To get extra money, some property owners have sold their investment properties or residences, offering seller financing and are receiving payments on their mortgage note. If this steady trickle of cash is not sufficient, they look for other solutions. A mortgage note buyer purchases notes for residential and/or commercial properties, cashing out the current note holder. The transaction is usually much quicker than other alternatives and involves no cash outlay for closing costs.
Prior to submitting the note to the buyer, the seller should gather certain documents. This paperwork should be in the personal files or the files of the attorney or real estate agent involved in the initial transaction. It includes a copy of the note, mortgage, escrow instructions, escrow closing statement, title insurance policy, and hazard insurance policy. If available, the loan payment record, appraisal from time of sale, pictures of the property, map, surveys, and plans should also be gathered.
A note buyer may not require all of this information. However, it is wise to have it available, just in case. This way, if it is requested, the document can be quickly retrieved and copied. It will not need to be requested from another party, which can delay the process. Once all the documents are compiled, the individual can submit the note to the selected note buyer. If the individual has not found a buyer, now is the time to do this. Many companies provide a free quote online or over the telephone.
It may take up to 48 hours to receive an initial quote. This is the preliminary dollar amount the investor is willing to offer, without conducting any verification of supplied information. If the seller agrees to this, the note buyer conducts a preliminary investigation that involves researching the property value and note seller credit score. This process may take a few days and may involve follow-up communication from the buyer to obtain additional information.
If the information originally submitted to get the quote proves inaccurate, the quote figure may change. This makes it important to be as thorough as possible during submission of the initial form. Being prepared and detailed streamlines this process. Following the preliminary investigation, the note purchaser provides the seller with a firm bid, which the seller confirms. The underwriting process begins after the note buyer has the necessary documents.
Underwriting usually involves checking the title for any liens, verifying details regarding the note, and conducting a drive-by appraisal. Assuming there are no issues, closing instructions and a closing date will be established. At closing, the transaction is finalized and the individual is provided with the agreed upon payment. Most note buying transactions close within a 30-day period.
Anyone interested in selling his or her mortgage note should do some homework before selecting a note buyer. A reputable buyer who has been in business for a while and offers a competitive quote is the best choice. There are many areas where this transaction can go wrong so selecting the best note buyer is very important.
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