| |
| |
|
Real Estate Information |
|
|
|
Why Are Mortgage Notes Discounted Anyway?
When real estate note brokers purchase partially paid notes, they pay the note holder a discounted price after factoring in the time value of money, the payer history, and property condition. If there is still a significant period of time left for the payer to make payments, the future payments are not worth the same amount in current dollars. Calculations are made to equate all the payments into current value, which is how the discount is determined. After purchasing notes at a discounted price, note brokers try to restructure the loan and increase its value. Increasing the value of the loan requires the payer to refinance or increase payments, which requires a new contract. Factoring the same concept of time value of money, we can understand how increasing payments now creates more value. The note can then be sold for a higher price. Discounts must be taken from the loan amount due to inflation and the time value of money. There may still be years left on the loan repayment, but the payments far in the future are not worth the same amount in dollars today. Calculations are made using special formulas to equate the future payment amounts into today's prices, making today's price discounted significantly. On the other side of the coin, notes that are well seasoned can fetch near remaining balance face value. Additional Major Reason Notes Are Discounted Although I am a broker myself, I put this site here because I want to bring you a clear understanding (from an insider's perspective) of the nuts and bolts mechanics of how the secondary market mortgage note industry works. A major reason many people are turned off from selling their real estate notes is because of the discount factor......but what you probably don't understand is that when you use a broker, like myself or any other broker anywhere, you pay additional fees that further drive down the amount of money you walk away from the table with. Significantly. Let me give you an example: You have a $50,000 note you need to sell. Although you could sell only a few payments or the whole note, for this example, let's say you wish to sell the whole note. You do a search on the internet and find a long list of brokers hawking phrases at you like, We can get you top dollar for your note..." and the like. So you choose one and give them basic information about your note so that they can give you a quote on what you could expect to receive for your note. So, the broker calls you back after speaking with an "actual investor" about your note. The investor has told the broker that he'll pay, say $41,000 for your note. Your broker says to you, "We can pay you $37,500 for your note". He explains the whole reason notes are discounted but never mentions that other $3,500 discount you had to take because of his broker fee. So, without ever discussing fees, you just paid $3,500 to have a guy make a phone call on your behalf to an "actual note buyer/investor. A Smarter Way To Sell Your Note What I am about to reveal to you is the subject of many nasty emails I get from other brokers....angry brokers. Angry because what I am about to tell you takes money out of their pockets and back into yours. All brokers are in possession of a "little black book" of the "real note buyers and investors". Private individuals mostly but it also includes institutional note buyers. Check it out yourself. It's the $67 Solution! www.mortgagenotecash.com/directaccess.htm Frederick Webb is a Certified Cash Flow Consultant and is President of Webb Funding Group, a small debt brokerage agency he runs with his wife, Kashita Webb Get more information about this and other information by visiting their website at: http://www.mortgagenotecash.com
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Should You Accept A Full Purchase Offer For Your Note or Not? You could be facing a dilemma when considering payout options on selling your mortgage note! To accept a full purchase offer or a partial purchase offer is not always an easy decision.Sure, to take the full purchase option is an easy decision to make if you're holding a second position note on a property that doesn't have any equity after you add the first and second mortgages, but what if that's not your situation? Full purchase payouts can be good if your primary concern is to just get out of the note and be done with it. Property Investment: Spoiled for Choice in Europes Emerging Markets You could be forgiven for thinking that property is the new dot.com. Apres-Ski European tax haven Andorra enjoys the same fiscal benefits as better known Monaco, adding to property demand from those looking for residency in a tax shelter as well as traditional ski chalet buyers who flock to the country between December and April each year.With the end of the ski season last month many ski resorts in Europe have closed up shop until early December with overseas property owners having little prospect of rental income in the summer months. San Diego Real Estate, Million Dollar Homes San Diego county has always been known for its Luxury Homes, yet in 2004 San Diego County luxury home sales (homes over $1,000,000) hit an incredible 2774 total units, an increase of almost 170% over total sales in 2003!In the entire State of California, A total of 33,107 homes sold for a million dollars or more last year. That was up 73. Property in Northern Spain If you're looking for the 'real' Spain where the culture, customs and the traditional Spanish lifestyle have been preserved - a Spain long ago lost and forgotten along the Costa del Sol - consider Northern Spain.Northern Spain has always been a popular holiday destination for southern Spanish tourists, but until relatively recently it was largely unexplored and undiscovered by foreign tourists and those expatriates seeking a new home overseas. 5 Things to Look for in a Property Appraiser Homeowners who are seeking a property appraiser often ask "How should I choose which real estate appraiser to use?" When selecting a property appraiser, keep the following in mind:Always make sure a property appraiser is licensed or certified by the state to perform real estate appraisals. While state licensing and/or certification isn't always an indication of quality, it ensures that an individual is has met certain standards and been authorized to perform property appraisals. Reinventing Real Estate, Part 2: Online and Empowered Consumers Are Taking Charge and Paying Less Demanding consumers"Internet buyers tend to be better informed on market conditions and better prepared to act on the home they want when they start working with a realtor. Luckily for realtors, these changes don't necessarily hurt, as long as they are able to adjust to the new relationship and realize that the new-style buyers value speed and efficiency over guidance when finding a home. Maintaining Small Town Charm In An Ever-Changing World Virtually any state in the country has the appeal of multiple small towns. Ask almost anyone who lives in small town why they are here and they'll tell you they enjoy the small town feeling while being close to all the conveniences of a larger city. U.S. Real Estate Sought By Foreign Investors Due to a Weaker Dollar The weak US dollar has been good news for real estate. Taking advantage of the favorable conversion rates, foreign investors are eagerly picking up real estate in major cities across the US. Real Estate Investing In Bulgaria As Bulgaria readies for joining the European Economic Community in 2007, many investors are looking to see if there are real estate bargains to be had there.Other countries have had a big run up before and shortly after joining the European Economic Community. 5 Rock-Solid Real Estate Investment Strategies Investing in real estate is more complex than simply buying and selling homes. To help new real estate investors to decide which strategy might work for them I put together 5 rock-solid strategies. Seller Financing - Six Safety Tips Why offer seller financing when you sell? A higher price, a good return on your money, a faster sale and to sell a property that is otherwise difficult to sell. Some good reasons, but how do you do it safely?1. Cheap Homes For Sale In Great Towns Good Homes Under $50,000? My wife Ana and I found cheap homes for sale all over the country during a seven-week drive, and we even bought one along the way. It was in a pretty little town in the mountains of western Montana, and it cost us $17,500. Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced Properties Are Available... Cheap, Bargain, Real Estate; Good Deals, Below Market, Low Priced properties are available if you know how to buy them. By Jody Hudson - Realtor since 1972. Relocation Humor: Why I Bought A House The Rental Experience in South FloridaReaders: This is based on a true experience -- only slightly exaggerated -- part of my life of adventure.If I had read my own book, Making the Big Move, and followed my own advice, none of this would have happened! A word to the wise . Should You Buy Hud Homes? Buy HUD homes are sometimes the cheapest option available for a common man to own a house. The fact that teachers and police officers could buy HUD homes at 50% off the market value attracts more potential buyers. A Log Home Story Solving problems while maximizing valuesThis story has a few good lessons and observations that no doubt can be used by you to take advantage of hidden opportunities that often lie in plain view for all to see, however, most people have not been trained or instructed on how to recognize or find them.The following true story begins with a classic log home package, engineered, manufactured, approved and delivered for use in Alaska. Choosing Your REALTOR ® With so many realtors competing for your business, how do you know which one to choose? Here are a few things to consider when choosing a realtor.The most important decision you will make in the sale of your home is the Realtor you choose. From Foreclosure to Forbearance - The Art of Negotiation As an active real estate investor you probably already know that the most important phase of your investment is when you buy the property. Most of us are getting the bargains in the foreclosure market. Foreclosure Foreclosure under a mortgage requires a court ordered sale conducted by the sheriff or other court-appointed official. Foreclosure process is called judicial foreclosure.
|
| home | site map |
| © 2006 |
