American Equity Funding is often asked this question: How should an owner financed mortgage note be structured to be sellable?
The following seven suggestions will increase the worth of your note:
1. Choose the right buyer
Always require potential buyers to fill out an application and pull their credit. Pending permission, American Equity Funding can pull the credit free of charge.
Research the current market in your area at the time of your sale and secure the best rate.
Keep the term as short as possible but still doable for those making the payments. This will promote a better price should you decide to sell your note.
4. Obtain a sufficient down payment
A larger down payment increases the loan-to-value (LTV) ratio and strengthens the selling value of your note.
5. Employ a professional
Ensure your note is compliant with all state and federal laws and employ a qualified professional to prepare your documents. Attorneys specializing in real estate should be able to assist with compliance.
6. Purchase a mortgagee title insurance policy
A mortgagee title insurance policy makes selling your note a quicker process and should only slightly alter the price of the policy. Especially if a combination policy is available which covers the owner as well as the person holding the mortgage. The extra cost is usually minimal (approximately $100.00) but is much more expensive if added later.
7. Charge a reasonable late fee
Charging a reasonable late fee that is in compliance with state and federal regulations encourages the purchasers to pay on time.
Following these important suggestions will result in a more profitable note! Please contact American Equity Funding for more information.