Owner Financing/Preparing to Sell an Owner-Financed Mortgage Note

Preparing to Sell an Owner-financed mortgage



Are you considering selling your home/property through owner financing and creating a
mortgage note? The following information will aid in safeguarding the process and prepare you
for a smooth transaction should you later decide to sell your private mortgage note for cash to a
third party.


Know your buyer.

You must know the buyer to maximize and effectively sell your mortgage note! Have a simple,
well-defined application and require a credit report. Short-form fillable applications are available
online for pertinent information. American Equity Funding can help with the soft pull credit
report pending all parties’ permission.

Procure a down payment.

Procuring the largest down payment possible will improve both loan-to-value (LTV) and
investment-to-value (ITV) ratios. This is important in case of default and reduces the risk of the
payer walking away if difficulties arise. A large down payment adds value to a note because the
purchaser/investor is more secure perchance the note seller does not pay, resulting in

Here is an example of LTV and ITV ratios; if a property sells for $100,000.00 with a $20,000.00
down payment and financing of $80,000.00, then the LTV is 80%.
The same note sells at a discounted amount of $70,000; therefore, the ITV becomes 70% for
the purchaser. A lower ITV means a safer investment and can increase the purchase price of
a mortgage note.

Hire Professionals.

Always hire professionals to close the sale of a property. When selling owner-financed property,
additional state and federal laws exist on usury, and certain disclosures must be prepared.

I recommend an attorney, a title company, and in most cases, a Residential Mortgage Loan
Originator (RMLO) to certify the transaction. American Equity Funding will recommend
professionals in your area and, in doing will alleviate potential problems at the point of property
sale and especially at the sale of a mortgage note.

Purchase mortgagee title insurance.

A mortgagee title policy protects the lender/investor as security for making mortgage money
available to a buyer. The cost is minimal when bought in combination with an owner’s policy
when selling property and is well worth the extra!

In most states, lenders can endorse their part of the policy over to the mortgage note purchaser.
This reduces the cost and can significantly speed up the purchase of the mortgage note. The title
policy is more expensive if needed later when selling the note as well as costing valuable time in
receiving cash.

Maintain an exact and verifiable pay history.

It is essential to keep correct payment records as well as to deposit and make copies of all checks
and deposit slips. A verifiable payment history can positively influence the value and
marketability of a note, even when credit is low.

A note with high credit will usually bring more money. However, a
consistent payment record can effectively sell a mortgage note if credit is marginal. Having a proven payment
account on your mortgage note will yield the best results.

Preserve the original promissory note.

Protect the original promissory note in a safe place. Lenders who lose promissory notes must
obtain an affidavit of lost note, and, like losing a check, it is a hassle to resolve. Safeguard your
promissory note, as it is a negotiable instrument.

These crucial efforts will protect your assets when owner financing and setting up the necessary
steps if the need arises to sell your owner-financed mortgage note in the future.
For further information, please call American Equity Funding at 1-800-874-2389 or visit us


Steve Whitlock manages American Equity Funding

Steve Whitlock, owner and operator of American Equity Funding.


American Equity Funding is the most exceptional note-buying company, and we have been answering your major questions for over 35 years.

Who buys mortgage notes?

Can I sell my owner-financed mortgage?

Can I get cash now for my owner-financed mortgage?

If you are looking for a professional company that buys mortgage notes, call or fill out our short form for a quick response.

I am the owner-operator of American Equity Funding.  I am a private note buyer, and I would love to personally help you get cash quickly!

Kindest Regards,

Steve Whitlock 

tel: 800-874-2389