Definition of a Mortgage Note

A mortgage note, also known as a real-estate note or a promissory notice , is a written document that creates an obligation by pledging real property to secure a debt. The deed-of trust note is a companion document to mortgage notes. This transfers the ownership of the property from its seller to the buyer. A mortgage note sale is when the note holder sells all or part of the note, to Seascape Capital.

The mortgage note identifies: the amount to be paid, plus interest, the rate at the which it is paid until it is fulfilled. It also assigns the borrower (also known as the “holder” and “carrier”) personal responsibility for repayment. The terms of each loan will determine other variables such as the interest rate and payment type (interest only or balloon).

Different types of mortgage notes:

There are many mortgage loans. They range from “conforming” which means it meets the purchase limit set by government-backed lenders Freddie Mac, Fannie Mae, and “conventional”, which has not been underwritten or backed by Freddie Mac or Fannie Mae, to “jumbo” when the purchase amount exceeds those limits and “nonconforming” which does not meet the criteria.

Owner financing is a form of financing where the seller of tangible items accepts a mortgage loan as part of the purchase price. This is also known as seller financing. Owner financing is often a way to finance individuals who have difficulty obtaining traditional mortgage loans through banks. You can carry mortgage notes on many real estate properties including mobile, land, and commercial.

We have now covered the basics of a mortgage note as well as the types of mortgage notes. Now we can understand how to sell notes. If you decide to sell your mortgage note, it is important to find a trustworthy buyer who understands the process and has an interest in pricing your note. Your note price will be determined by a variety of factors including the property type and condition, equity and seasoning, payer credit and terms. A note buyer who is able to fully explain the sale of a mortgage and answer all your questions should be an excellent choice.

Our goal is to provide you with useful and important information and answer any questions that you may have throughout the process. Call ELM today if you have any questions or want to make an offer to purchase your note. We welcome your questions and comments. Please feel free to send us any information on mortgage notes that is of interest to you.