Discount Note Business
Discount Note Business Book By John Alexander Available at Amazon.com Just $9.99
Download to your PC/ iPhone/ Android/ Kindle/ Blackberry/ iPad
Download to your PC/ iPhone/ Android/ Kindle/ Blackberry/ iPad
Discounting a mortgage, is buying a mortgage at less than the current pay off balance.
Discounting is widely accepted because cash today is more valuable than payments over a long period of time. $100.00 bought more 20 years ago than it will today. It will buy even less 20 years from now. An interest rate on the loan amount helps keep the value of a note in line with inflation but, because a seller can’t spend money he hasn’t received yet, (via monthly payments); the seller is more inclined to accept less than full value for his note in today’s dollars. If I gave you a choice of receiving $1,000.00 in cash today, or $2,000.00 in cash due in 10 years, which would you choose? Can you do more with it now? Can you possibly make it grow into a greater amount than the fixed amount of $2000.00 in the next 10 years? These are some of the thoughts going on inside a seller’s head when making a choice to sell their note now.
An Overview of Each Step in the Note Purchasing Process
To buy a mortgage at a discount that is profitable to you is the main objective in buying a note from a seller. For example: A seller has a mortgage and note which pays 120 payments (ten years) of $786.35 monthly, at 10%, and currently the note has a balance of $60,000.00. If the seller wants cash now instead of payments, he will have to agree to a discount of the $60,000.00 note. He may agree to sell the Note, for say...$54,000.00 cash.
You then fill out our Mortgage Purchase Agreement, (a copy can be found in Appendix A in my book "How to Flip Discounted Notes" available at Amazon.com ), have the seller sign it, then let the Note Purchaser take over from there.
The Note Purchaser will ask you for certain documents according to the type of mortgage they are buying.
You then assign the note to the Note Purchaser (The Note Purchaser will help you do this part).
The Note Purchaser now has all the rights you had as the original signer of that Mortgage Purchase Agreement and can now take over your position and purchase the note. You have an agreement with the Note Purchasing Company to pay you a certain amount for the assignment after closing. That is how you make your profit.
The Note Purchaser will then arrange with a Title Company to close the deal. After closing, you receive your check within a few days.
HOME MORTGAGE CREATION
HOW "TRANSACTION" IS WORKED AND WHY
The mortgage holder owns a tangible asset that can be sold just like a car or other piece of property.
A mortgage and note is like an annuity, a type of investment that pays cash in some structured way either monthly, quarterly, or annually. Similar to an annuity, the mortgage has a market in the investment world. Large "Investor Pools" actively buy and sell these mortgages like stock or bonds. Daily, many mortgages change hands by these investors. Your part is to find and put together the mortgage package so the note holder can purchase it in such a way, as to allow them to then, sell or trade the mortgage in a common manner with other mortgages.
Being that a mortgage is just like any other type of investment, its value can go up or down, depending on market conditions. When home prices are going up and interest rates are going down, investors will buy more notes at better prices.
As home prices go up, the collateral for the investment goes up thereby making a more secure asset. As the interest rate goes down, investments are receiving a smaller return, (example) 8% instead of what a note holder receives, maybe 10% or more.
If interest rates rise to 10% and your seller is holding a note at 8%, he cannot increase his interest rate, so he must discount his Note even more, to get out of it. He may really want out of it then so he can put his money to work earning a higher rate of return elsewhere. These are some reasons that motivate a seller to sell his Note during certain economic times.
Despite the economics of it, the MAIN REASON sellers sell their note for cash is a NEED for money NOW! ! ! Usually a large expense has come up, taxes are owed, another investment opportunity has arisen etc., and the seller needs cash NOW.
WORKING WITH THE NOTE BUYERS
Note buyers compete for your business by giving added benefits for doing business with them. Each will have a list of specialty salutations they can buy that others can’t. Depending on the note details and circumstances will determine which company you should do business with. Some companies specializes in dealing with beginning investors who will need the extra help to make sure all the steps are completed properly and to assist with problems as they arise during the transaction, others will prefer more experienced brokers.
Many note buyers quote you on a percentage basis of the note amount they are buying. They charge a small set amount on each transaction and let you make the majority of the profits.
Note buyers move large volumes of notes each month and purchase millions in note values each year. The large buyers cannot take the time during a transaction to teach beginning note buyers how to correct the problems; as a result, many note purchases will be turned down before getting to a closing. Every transaction has its own particular problems, and the more you know, the better your chances are for a successful transaction.
Learn the complete business using my book "How to Flip Discounted Notes" available for download at Amazon.com
Just $9.99.
It even has links to all the forms needed to complete transactions as well as my favorite sources to sell your notes (Note Purchasers) for the current year 2011. The sources are updated as needed to keep you up to date.
Discounting is widely accepted because cash today is more valuable than payments over a long period of time. $100.00 bought more 20 years ago than it will today. It will buy even less 20 years from now. An interest rate on the loan amount helps keep the value of a note in line with inflation but, because a seller can’t spend money he hasn’t received yet, (via monthly payments); the seller is more inclined to accept less than full value for his note in today’s dollars. If I gave you a choice of receiving $1,000.00 in cash today, or $2,000.00 in cash due in 10 years, which would you choose? Can you do more with it now? Can you possibly make it grow into a greater amount than the fixed amount of $2000.00 in the next 10 years? These are some of the thoughts going on inside a seller’s head when making a choice to sell their note now.
An Overview of Each Step in the Note Purchasing Process
To buy a mortgage at a discount that is profitable to you is the main objective in buying a note from a seller. For example: A seller has a mortgage and note which pays 120 payments (ten years) of $786.35 monthly, at 10%, and currently the note has a balance of $60,000.00. If the seller wants cash now instead of payments, he will have to agree to a discount of the $60,000.00 note. He may agree to sell the Note, for say...$54,000.00 cash.
You then fill out our Mortgage Purchase Agreement, (a copy can be found in Appendix A in my book "How to Flip Discounted Notes" available at Amazon.com ), have the seller sign it, then let the Note Purchaser take over from there.
The Note Purchaser will ask you for certain documents according to the type of mortgage they are buying.
You then assign the note to the Note Purchaser (The Note Purchaser will help you do this part).
The Note Purchaser now has all the rights you had as the original signer of that Mortgage Purchase Agreement and can now take over your position and purchase the note. You have an agreement with the Note Purchasing Company to pay you a certain amount for the assignment after closing. That is how you make your profit.
The Note Purchaser will then arrange with a Title Company to close the deal. After closing, you receive your check within a few days.
HOME MORTGAGE CREATION
HOW "TRANSACTION" IS WORKED AND WHY
The mortgage holder owns a tangible asset that can be sold just like a car or other piece of property.
A mortgage and note is like an annuity, a type of investment that pays cash in some structured way either monthly, quarterly, or annually. Similar to an annuity, the mortgage has a market in the investment world. Large "Investor Pools" actively buy and sell these mortgages like stock or bonds. Daily, many mortgages change hands by these investors. Your part is to find and put together the mortgage package so the note holder can purchase it in such a way, as to allow them to then, sell or trade the mortgage in a common manner with other mortgages.
Being that a mortgage is just like any other type of investment, its value can go up or down, depending on market conditions. When home prices are going up and interest rates are going down, investors will buy more notes at better prices.
As home prices go up, the collateral for the investment goes up thereby making a more secure asset. As the interest rate goes down, investments are receiving a smaller return, (example) 8% instead of what a note holder receives, maybe 10% or more.
If interest rates rise to 10% and your seller is holding a note at 8%, he cannot increase his interest rate, so he must discount his Note even more, to get out of it. He may really want out of it then so he can put his money to work earning a higher rate of return elsewhere. These are some reasons that motivate a seller to sell his Note during certain economic times.
Despite the economics of it, the MAIN REASON sellers sell their note for cash is a NEED for money NOW! ! ! Usually a large expense has come up, taxes are owed, another investment opportunity has arisen etc., and the seller needs cash NOW.
WORKING WITH THE NOTE BUYERS
Note buyers compete for your business by giving added benefits for doing business with them. Each will have a list of specialty salutations they can buy that others can’t. Depending on the note details and circumstances will determine which company you should do business with. Some companies specializes in dealing with beginning investors who will need the extra help to make sure all the steps are completed properly and to assist with problems as they arise during the transaction, others will prefer more experienced brokers.
Many note buyers quote you on a percentage basis of the note amount they are buying. They charge a small set amount on each transaction and let you make the majority of the profits.
Note buyers move large volumes of notes each month and purchase millions in note values each year. The large buyers cannot take the time during a transaction to teach beginning note buyers how to correct the problems; as a result, many note purchases will be turned down before getting to a closing. Every transaction has its own particular problems, and the more you know, the better your chances are for a successful transaction.
Learn the complete business using my book "How to Flip Discounted Notes" available for download at Amazon.com
Just $9.99.
It even has links to all the forms needed to complete transactions as well as my favorite sources to sell your notes (Note Purchasers) for the current year 2011. The sources are updated as needed to keep you up to date.
Discount Note Business Book By John Alexander Available at Amazon.com Just $9.99
Download to your PC/ iPhone/ Android/ Kindle/ Blackberry/ iPad
Download to your PC/ iPhone/ Android/ Kindle/ Blackberry/ iPad