Seven Steps to Increase Value When Selling an Owner-Financed Mortgage Note


Is it time to sell your owner-financed mortgage note? American Equity Funding recommends the

Seven following steps to increase the value of a note.

1. Choose the right borrower

Always require potential borrowers to fill out an application and pull their credit. Pending

permission, American Equity Funding will do this free of charge. Credit is one of the most

important criteria for ensuring a reasonable price on a note. The higher the credit score, the lower

the risk and the greater the potential reward for the note purchaser.

2. Secure the best interest rate

Conduct due diligence by researching current market trends in the local area and secure the

highest interest rate obtainable at the time of sale. The rate of interest charged can significantly

affect the price value of a note. While important to comply with local, state, and federal laws,

owner-financed transactions typically receive 2% to 4% more than bank loans. In general, banks

may not be willing to take the risks involved; thus, a seller-financed mortgage note is used.


3. Implement a short term


Keeping the note term as short as possible will facilitate a better selling price. However, it is also

important to maintain a feasible payment plan for the buyer. Most investors encourage a ten-to-

twenty-year term, which results in an affordable monthly sum.


4. Obtain a sufficient down payment


A sufficient down payment strengthens the Loan-to-Value (LTV) ratio, heightens the possibility

of a quick sale, and boosts the value of a mortgage note. LTV can organically be positively

improved by the passage of time and appreciation of property values.


Loan-to-Value (LTV): The amount of equity a payer has in the property. For example, if a

property sells for $100,000 with a $20,000 down payment, the remaining mortgage note is

$80,000. The LTV is then 80%.

Investment-to-Value (ITV): The total investment of a mortgage note purchaser. For example, if

an investor pays $70,000 for the note above, and the ITV is 70%.


5. Employ a professional


Employing a qualified professional to prepare your documents will guarantee that your note

follows all state and federal laws. Attorneys specializing in real estate will be able to assist in

these matters. There are many moving parts when selling an owner-financed property and a

Registered Mortgage Loan Originator (RMLO) is often needed to underwrite the loan.  American

Equity Funding can recommend a properly licensed RMLO in individual states.


6. Purchase a mortgagee title insurance policy


A mortgagee title insurance policy protects the lender from future claims to ownership of the

mortgaged property and is highly recommended. The cost is usually minimal in most states

(approximately $100.00), especially when purchased at the same time as the sale of the property.

The policy will cost more if bought when selling a mortgage note.


7. Charge a reasonable late fee


Charging a reasonable late fee that follows state and federal regulations has dual benefits; it

encourages the purchasers to pay on time and helps decrease the stress of collection calls. In

most states and jurisdictions, the late charge must be between 0% and 5%.


Heeding these beneficial suggestions when structuring your owner-financed mortgage note will

facilitate a successful and profitable note-selling result! Please contact American Equity

Funding, Inc. for more information.

These crucial efforts will be valuable when selling your mortgage note! American Equity Funding pays cash for notes and is happy to assist in any way. At American Equity Funding, wework for you.


Steve Whitlock manages 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