- You want to receive a lump sum of cash upfront instead of waiting for smaller payments over a longer period of time.
- You need to pay off other debts, make a large purchase, fund a child or grandchild’s college dream, take that dream vacation, and would benefit from the liquidity that selling your mortgage note could provide.
- You are struggling to keep up with the administrative burden and costs associated with managing a mortgage note.
- You want to eliminate the risk of non-payment or default on the part of the borrower, and shift that risk onto the purchaser of the note.
- You no longer want to be involved in the loan process or deal with the borrower directly, and prefer to wash your hands of the transaction by selling the note to a third party.
- You won’t have to deal with collecting the monthly payments and/or service the note any more. Additionally, you will not have to worry about a lapse in the property insurance policy, unpaid real estate taxes, destruction of the asset, IRS reporting or payor issues (i.e. Death, divorce)
- You want to Diversify your portfolio: If you have a significant amount of money tied up in a single mortgage note, selling it can allow you to diversify your portfolio and spread out your investments.
- You want to take advantage of opportunities: Selling your mortgage note can provide you with the funds to take advantage of other investment opportunities or business opportunities.
- You want to simplify estate planning: If you are planning your estate, selling your mortgage note can simplify the process by converting a potentially complicated asset into cash that can be distributed among your beneficiaries.
- Inflation– cash today can be expected to be worth more today than in the future!
We will value of your note on the individual actual asset, location, type and we will need the following information:
- The original principal balance of the note. (date originated)
- The remaining principal balance of the note.
- The interest rate on the note.
- The term or length of the note.
- The credit worthiness of the borrower.
The process can be completed in as quickly as 7 business days, but 15 business days is standard. Your money
will be wired to the title company/atorney where all documents will be exchanged in safe secure manner. It
typically takes between 12-24 hours for funds to be received.
Absolutely NOT. The original note’s terms and conditions will remain the same. I Buy Notes Now will inform the
buyer of the new payment instructions when the time comes.
There are many types of notes that can be purchased, including:
1. Performing notes: these are notes where the borrower is making their payments on time and in full.
2. Non-performing notes: these are notes where the borrower is not making their payments on time or in full.
3. Seasoned notes: these are notes that have a track record of payments being made on time and are considered less risky.
4. New notes: these are notes that have not yet had any payments made on them.
5. First mortgage notes: these are notes where the mortgage is the first lien on the property.
6. Balloon notes: these are notes where the borrower makes smaller payments for a period of time and then a large payment at the end.
7. Real estate mortgages: these are notes secured by a mortgage on a piece of real estate.
8. Contracts for deed / land contracts: these are agreements where the seller finances the purchase of the property and retains title until the buyer pays in full.
9. Deeds of trust / trust deeds: these are similar to mortgages, but involve a third party trustee to hold the title until the loan is paid off.
10. Partial interest: these are notes where the purchaser buys a portion of the note, rather than the whole thing.
11. Full or partial note purchases: these are notes where the purchaser can buy either the entire note or a portion of it.
12. Options contracts for sale / lease purchase agreements: these are agreements where the purchaser has the option to buy the property at a later date.
13. First & second deeds of trust / purchase money mortgages: these are notes where the mortgage is either the first or second lien on the property.
(These are some examples but not limited to):
- Single family residential – a property designed for and used by a single family for residential purposes. These properties typically have one kitchen, living room, and bathroom, and are located in residential neighborhoods.
- Multi-family properties – these are properties that have two or more separate living units within the same building. Examples include duplexes, triplexes, fourplexes, and apartment buildings.
- Commercial properties – these properties are designed for commercial use, and can include office buildings, retail spaces, industrial buildings, and other commercial properties. They are often located in commercial areas and are used for businesses and commerce.
- Farm and ranch – these properties are typically used for agricultural purposes and can include farms, ranches, and other rural properties.
- Hospitality – these properties are used for lodging, such as hotels, motels, resorts, and other recreational properties.
- Condominiums – these properties are similar to apartments but are owned by individuals rather than rented. They often have shared amenities and are governed by a homeowners’ association.
- Mobile homes with lot – these are manufactured homes that are permanently affixed to a piece of land, rather than being movable like traditional mobile homes.
A Partial Note is the sale of a fixed number of future payments (e.g., the next 24 payments) rather than the entire note. The original note holder remains the legal owner of the underlying note.
An investor pays you a lump sum for a defined stream of income for a specific period. Once those payments are collected, all remaining future payments “revert” back to you entirely.
Immediate Cash: Access liquidity for other investments, medical expenses, or personal needs without fully divesting.
Lower Discount: Selling immediate payments often results in a smaller overall discount compared to selling the full note due to the “time value of money”.
Retained Interest: You keep the “back-end” of the note, allowing you to benefit from future equity and interest.
The Partial Purchase Agreement must specify how early payoff proceeds are split between you and the investor.
In many cases, an early payoff can result in a higher total return for the seller than a full upfront sale.
Straight Partial: Selling the next set of monthly payments (e.g., next 12 months).
Split Payment: Sharing a portion of each monthly payment with the investor for a set time.
Balloon Split: Selling a portion of monthly payments plus a part of the final balloon payment.
Sellers can typically expect to receive payment within approximately 20 business days after closing.
Investors typically require the Original Note with a proper endorsement and a recorded Assignment of Mortgage or Deed of Trust.
A specialized Partial Purchase and Sale Agreement outlines the specific terms of the payment split and reversion
12 Common Note Owner Misconceptions
That assumption often creates expensive surprises. Foreclosure is a legal process, not an instant transfer of ownership. Until the process runs its course, the borrower typically remains the owner of record. A few points that matter in the real world:
- Foreclosure timelines can be slower than most note holders expect
- Ownership usually does not transfer unless the foreclosure sale is completed and properly recorded
- In some states, the borrower may have redemption rights, which can allow them to reclaim the property by paying the debt within a defined period
- Even at auction, the note holder only ends up owning the property if a third party does not outbid them and the sale is finalized
This is one reason some note holders choose to exit the position instead of managing a long legal timeline. A note can be a solid asset, but it can also become a job.
This is another big misunderstanding. Here are some facts:
- The note holder (lender, 1st position) gets paid up to the amount owed — principal, accrued interest, and approved legal fees.
- Any surplus from the foreclosure sale (if the property sells for more than what’s owed) goes to junior lien holders, then the borrower — not to the lender (1st).
- Conversely, if the sale doesn’t cover the full amount owed, the lender may need to pursue a deficiency judgment — and that’s not guaranteed or always collectible.
Bottom line: You’re entitled to be made whole, not to profit beyond what the borrower owes.
Not necessarily. Property value and note value are not the same thing.
A note is only as strong as three core elements:
- The borrower’s willingness and ability to pay
- The legal enforceability of the documents
- The equity position relative to true market value
Online estimates are not underwriting tools. Automated valuations can be materially wrong. Condition matters. Location matters. Market liquidity matters.
Even if the property is worth more than the unpaid balance, that equity only protects you if:
- The lien position is clean
- Taxes are current
- There are no senior liens
- Foreclosure costs don’t erode your margin
Equity is a cushion, not a strategy.
Strong note investors underwrite cash flow first and collateral second. If the borrower stops paying, your timeline, legal costs, and holding expenses determine your actual outcome.
A note backed by “equity” can still become a multi-year workout.
Before assuming you’re protected, ask:
- What is the true as-is value?
- What are foreclosure timelines in this state?
- What would this cost me if I had to take it back?
Clarity upfront prevents expensive surprises later.
Performance history helps. It does not eliminate risk.
A borrower who has paid for three years can still default in year four.
Risk assessment includes:
- Current equity position
- Remaining term
- Interest rate relative to market
- Borrower financial stability
- Property condition
If your note carries a below-market rate, refinancing risk increases if rates drop. If your rate is high, default risk can increase under financial stress.
Another overlooked factor: concentration risk. If this is your only note, one default affects 100 percent of your cash flow.
Performing notes are valuable assets. But they are still credit instruments tied to a single property and borrower.
Professional note buyers price based on probability, not hope.
If your goal is predictability, evaluate whether continued monthly payments or a lump sum today better serves your position.
Understanding risk does not mean assuming the worst. It means planning for it.
Market value rarely equals unpaid principal balance. A note trades based on yield, risk, and market conditions.
Buyers evaluate:
- Interest rate versus current market rates
- Payment history
- Remaining term
- Loan-to-value ratio
- Documentation quality
If your note carries a 5 percent rate in a higher rate environment, a buyer will discount it to achieve their target yield.
The stronger the collateral and payment history, the smaller the discount. But a discount almost always exists.
Liquidity has a price. This is not negative. It is how secondary markets function.
If you want to understand what your note might trade for, it requires a structured review, not a guess.
Many note holders are surprised by valuation until they see how institutional buyers underwrite.
Transparency matters. Numbers matter.
If you want clarity on value versus balance, it starts with analysis, not assumptions.
It can be. It is not automatically passive.
Owning a note means:
- Tracking payments
- Managing escrow (if applicable)
- Monitoring taxes and insurance
- Responding to borrower communication
- Handling defaults if they occur
If servicing is not properly set up, small administrative issues become larger problems.
Professional servicing reduces risk. Self-servicing without structure increases it.
Passive income requires systems.
If a borrower requests a modification, do you know how to document it properly? If taxes go unpaid, how quickly will you know? If insurance lapses, who tracks it?
A note can be a strong asset. It can also become a management obligation.
Many note holders reach a point where they decide they prefer liquidity over oversight. That decision is strategic, not emotional.
Know what you own. Know what it requires.
Not automatically. Bankruptcy does not erase a properly recorded mortgage lien.
In most cases:
- The debt may be discharged personally
- The lien remains attached to the property
That distinction is critical.
However, bankruptcy can:
- Delay foreclosure
- Restructure payment terms under court supervision
- Increase legal costs
Automatic stays temporarily halt collection activity. You must follow court procedure. Each chapter type has different implications.
The key takeaway: Bankruptcy changes the process, not necessarily your security interest.
Understanding the difference between unsecured debt and secured real estate debt is essential. Preparation reduces panic.
If you hold a note, know your lien position and documentation quality. Those details determine outcome.
Skipping title work can become expensive.
Without proper title review, you may not know:
- Whether prior liens exist
- If taxes were current at origination
- If legal descriptions are correct
- If the mortgage was recorded properly
An improperly recorded lien can jeopardize priority.
Title insurance protects against defects you cannot see.
Seller financing often occurs between private parties without institutional safeguards. Documentation errors happen more often than people assume.
A small upfront cost can prevent a large downstream loss.
If you originated a note years ago, it may be worth confirming the file is complete and recorded correctly.
Security begins with enforceability.
A partial sale can be structured in multiple ways.
In many cases:
- You sell a defined number of future payments
- You retain the remaining balance
- Once the buyer receives the agreed payments, full payment stream returns to you
This can provide:
- Immediate liquidity
- Retained long-term income
- Reduced exposure
It is not an all-or-nothing decision.
Structure matters. Documentation matters. Servicing coordination matters.
For some note holders, a partial sale solves a short-term need without fully exiting the position.
Flexibility exists when you understand the mechanics.
Property improvements help value. They do not eliminate credit risk.
A renovated kitchen does not guarantee continued payments.
Your exposure depends on:
- Loan balance versus current value
- Borrower stability
- Market liquidity
If market conditions shift, value can compress even after improvements.
Collateral strength supports recovery. It does not replace underwriting.
The primary question remains: Will payments continue as agreed?
Strong notes combine equity and payment consistency. Relying solely on property condition is incomplete risk analysis.
Accrued interest may not always be fully collectible.
State laws, court rulings, and judge discretion can affect recoverable amounts.
Some states limit default interest enforcement. Some courts scrutinize fee structures. Extended timelines can complicate calculations.
Assuming all accrued interest will be recovered can distort expectations.
Underwriting realistic recovery scenarios is more prudent than projecting maximum theoretical returns.
Know your documents. Know your jurisdiction. Legal nuance matters.
Time can increase yield. It can also increase exposure.
Longer hold periods mean:
- Greater probability of life events impacting borrower
- Market cycle changes
- Property condition shifts
- Legal environment adjustments
Holding to maturity works when risk remains stable. But concentration risk and opportunity cost matter.
Sometimes converting future payments into present capital allows redeployment into diversified assets.
There is no universal right answer. There is only alignment with your objectives.
Evaluate your position periodically. A note is an asset. It should be managed like one.