The Garden State has the highest population density of any state across its 8722 square miles. From High Point to Atlantic City, many of the residential and commercial properties have been sold using owner financing and a mortgage note. Some of those notes were later sold to a New Jersey note investor.
A mortgage note is created when a buyer and seller of a property agree on pricing details, usually with no bank involvement. The mortgage makes the property the collateral. The mortgage note states, among other things:
- The original note amount
- Interest rate
- Length in years
- When payments start
- The amount of the payments
The note is arguably the most important document in the transaction. It is wise to have an attorney or other expert prepare the note, mortgage, and related documents.
Once all documents have been signed, the buyer owns the property. However, just like with a bank loan, the buyer is obligated to make the payments and meet other conditions. If he or she fails to do that, they risk eventually losing control and ownership of the property.
Once the seller of the property (the note holder) has received some payments, they have the option of keeping the mortgage note or selling it to a New Jersey note investor. If they keep the note, they stand to receive lots of payments, but carry risks such as:
- Late payments or outright default by the buyer
- Buyer not maintaining fire insurance
- The buyer not staying current with the property taxes
- Poor maintenance of the property, which means a lower value and weaker collateral
There a lot of reasons to sell the mortgage note, especially if the seller is cash-poor, is behind on bills, or is get up in years.
Selling a Note
To get immediate cash out of a note, the note holder would contact a New Jersey note investor or broker to understand the process and pricing options. The note holder can choose to sell all or just some of the note payments, depending on their financial situation. For example, if the note balance is $150,000 but the seller only needs $25,000 to pay off some credit card bills, then it is only necessary to sell a limited number of payments. An excellent New Jersey note investor will explain the pricing options and process in detail. Be sure that the investor is experienced, competent, licensed in their home state, and highly rated by the Better Business Bureau.
The process for selling a note nearly always has these steps:
- The note holder and the investor agree upon a price to buy the note. The buy price will be less than the current balance of the note.
- The investor will send the note holder an agreement listing what was discussed and request copies of all relevant documents.
- Once the signed agreement and other documents are received by the investor, the credit of the buyer will be checked out.
- The note investor will order a drive-by appraisal of the property to determine its value, usually at the investor’s expense.
- Next, the investor will have a local title company check for any liens on the property. Steps 4 and 5 each take 5-10 business days.
- Once the above steps are successfully completed, assignment documents will be sent to the note holder. He or she signs those and sends them back with some of their original documents.
- The note investor records the assignment with the county and wires the funds to the note holder.
Seascape Capital has an A+ rating from the Better Business Bureau and is fully licensed. Seascape has been involved with the successful purchase of a number of New Jersey notes in the past, and looks forward to working with you on the sale of your note.