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Mikk Sachar

Discover How to Sell a Mortgage Note & Create Maximum Value How Much Is A Mortgage Note

Mortgage Note Safety – What exactly is Loan to Value and why it’s important.

November 19, 2018

Mortgage Loan To Value | Its Importance And Why

Welcome to yet another tip from sell my mortgage note for cash. What exactly is the Mortgage Loan to Value and why is it important?

Today we are going to discuss one of those acronyms in the Mortgage Note world that sometimes people get confused about.  Truth be told, it’s quite simple to understand really and if you’re going to get involved in mortgage notes in any way, it’s very important you understand this concept.

So today we are going to be talking about Mortgage Note Safety and the mortgage note’s loan to value ratio… aka LTV.

Simply put… a low loan-to-value ratio makes your note safer and increases its resale value.

But what exactly is the loan-to-value ratio…aka LTV?

The loan-to-value ratio for your note is the sum of the current loan balance(s) for your loan and all senior loans divided by the current market value of the property securing the note.

Here are 2 scenarios.

(Scenario 1)
Loan Amount – 1st Lien Position = $100,000
Loan Amount – 2nd Lien Position = $0 (n/a)
Market Value of Property = $200,000

Loan to Value Ratio = 50% (100,000 / 200,000)

(Scenario 2)
Loan Amount – 1st Lien Position = $100,000
Loan Amount – 2nd Lien Position = $44,000
Market Value of Property = $200,000

Loan to Value Ratio = 72% (144,000 / 200,000)

In general… the lower your LTV, the more valuable your note.

Why?

Simple… the lower the LTV the more equity there is in the property.  Equity is simply defined as the difference between the market value of the home and the loans against it.

For example, let’s assume the home is worth $100,000 and there are 2 mortgages against the house equaling $65,000.  In this case, the equity is simply $35,000 which is the difference between $100,000 and $65,000.

With $35,000 in equity, investing in this mortgage note is way safer than investing in one that only has $5,000 in equity.

Assume the home is worth $100,000 but this time the mortgages against the property equal $95,000. In that scenario, there is only $5,000 of equity which means… if someone buys this note, there is only a $5,000 cushion in the home’s value before the amount owed against the home is more than the home’s value itself.

That’s a scary situation for mortgage note investors because home values can easily fluctuate $5,000 but it’s harder for them to drop $35,000 in value.  As such, the note against the home with $35,000 in equity is a way safer mortgage note investment than the one with only $5,000 in equity.

In LTV terms, the safer investment discussed above has an LTV of 65% as opposed to the more risky mortgage note LTV of 95%.

In summary, the LTV of your note and deed of trust on the property (first position, second position, etc.) is critical to the note’s value.  The lower the LTV the more attractive of a mortgage note you have.

Thank you for reading and I hope this explains Loan to Value a little better.  Be on the look out for my next tip here at Sell My Mortgage Note for Cash.

 

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Discover How to Sell a Mortgage Note & Create Maximum Value Mortgage Note Safety

The Security Instrument | What Is It And How Does It Help Me?

November 15, 2018
The Security Instrument

Tutorial Part 2 –  The Security Instrument… What Is It and How Does It Help Me?

Hi and Welcome. In today’s lesson we’re going to discuss the nuts and bolts of the Security Instrument.

Let’s get started. Simply put…

The security instrument is the document that provides for the alternate repayment of the debt to you in the case of default by the borrower.  Pretty boring I know but of course very important when it comes to real estate notes, especially if you’re considering selling your mortgage note.

The security instrument is recorded in the county recorder’s office as a lien against the title of the property you sold.

 

 

There are three kinds of instruments used to make real estate security for a debt:

(1) mortgage, with or without the power of sale;

(2) deed of trust; and

(3) land contract.

In many states, deeds of trust are by far the most common. People often call them mortgages. They account for well over 99% of the security devices used for real estate.

The land contract—known by many names such as installment contract, contract for deed, contract of sale, conditional sales contract, and the like—is also used on occasion.

I hope you enjoyed this quick tutorial.

Here’s a quick definition of the Security Instrument by Quicken Loans.

Thank you once again for visiting Sell My Mortgage Note For Cash.

 

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What Exactly Is A Promissory Note?

November 10, 2018
Promissory Note

What Exactly Is A Promissory Note?

Hi and thank you for visiting. I’m glad you’re here because today I’m going to start my tutorial series on mortgage notes and teach you everything you would ever need to know about real estate notes, starting with the answers to the question: What is a Promissory Note? .

If you’re here, you probably already know that I’m a professional mortgage note buyer but this tutorial series isn’t about me.  Instead, it’s about you learning the ins and outs of mortgage notes in the hopes that when the time comes and you’re ready to create one, you create one of great value.

Because trust me, there are good and crappy mortgage notes out there.  The last thing you want to do is create a bad note that has no value in the market.

To help you avoid that, my plan over the next several weeks is to update this blog with a new tutorial at least every 2 weeks coupled with a video as well for a better understanding of the material.

Thank you again for visiting Sell My Mortgage Note for Cash.  Let’s get started. Here’s your first video with additional text below.

Tutorial Part 1

In today’s lesson we’re going to discuss some of the nuts and bolts of the mortgage note business. Just so you understand where you are right now, you are here because you are interested in selling a mortgage note. Perhaps you’re not even aware that you can sell a mortgage note.

If that’s true, consider yourself lucky because you are definitely in the right place if you are interested in selling a mortgage note.

Before we get too deep into the lessons, I think we need to first cover the basics. And that’s what I’m doing today with this sell my mortgage note for cash tutorial part 1 titled “Promissory Note, What Exactly is It?”

Let’s start here!

Did you know that The Promissory Note does five different things.

Defined properly, a promissory note is a written promise to pay a certain amount of money, and its payment is secured by some type of security instrument that becomes a lien on the real property.

In particular, the note specifies:

(1) the amount of the loan (principal);

(2) the interest rate (interest);

(3) the amount and frequency of payments (debt service);

(4) when the borrower must repay the principal (due date); and

(5) the penalties imposed if the borrower fails to timely pay or tender a payment (late charge) or decides to pay a portion or all of the principal prior to the due date (prepayment penalty).

Further, the promissory note identifies the person who makes the payments to you (the buyer of your property—the borrower) and the person who receives the payments (you). In a nutshell, that’s exactly what a promissory note is. Pretty simple really.

That’s it for now. Please look for my next sell my mortgage note for cash tutorial where I’ll reveal yet another important aspect of the mortgage note.

Here is investopedia’s definition of a Promissory Note.  Pretty damn boring if I say so myself.  Lol.

Thank you for visiting sell my mortgage note for cash.

 

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Common phrases by theidioms.com