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

---

Property Investing Secrets 7

Property Investing Secrets:How Buying Real Estate Is Like Planning a... Read More

Make Money As A Slumlord

Be a slumlord? Okay, I got your attention, now the... Read More

Buying Property in Spain

You have made the decision to move to Spain and... Read More

Back To The Future - Big Changes Are Coming, Get Ready Now

The comments below are quoted from a recent speech by... Read More

Location, Location, Location

Location, location, location - known as the 3 most important... Read More

Landlording And Other Aggravations

Here's the gripping story...You are the landlord of a small... Read More

Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business

Getting your real estate website more traffic is easy if... Read More

Boston Real Estate ? You Still Have Considerable Control Over the Sale of Your Boston Home

Boston real estate is a hot topic. Daily newspaper articles... Read More

Empty Nesters Flock To Inner City

Babyboomers whose children have left home, commonly known as "empty-nesters"... Read More

From Foreclosure to Forbearance - The Art of Negotiation

As an active real estate investor you probably already know... Read More

Finding A Capable Agent To Meet Your Real Estate Needs

Whether you're a first-time buyer, selling your current home or... Read More

How to Qualify For 90% Plus Commercial Financing!!!

There are three important questions that you must understand and... Read More

The Psyche of The Seller and The Tenant Buyer

For those of you who were not psychology majors the... Read More

Real Estate Investing Produces Extraordinary Profits

Imagine making $5000 a year from real estate investing without... Read More

The Sadness of Old Buildings

From the book No Smooshing!For years, I've carried on a... Read More

Buying an Unfinished Home Maybe Your Answer

For the first time "want-to-be" homeowner, purchasing an unfinished new... Read More

Real Estate Investing - Books,TV Infomercials, and Seminars

Real estate investing has become popularized today because of real... Read More

Real Estate Investing In Belize

Any trip to Belize starts fantasies of owning a beach... Read More

Where is Florida Investment Property

Florida Investment Property ? Why Investing is a Wise Decision... Read More

Selling by Owner = Saving by Owner?

According to the National Association of Realtors, For Sale By... Read More

Building A Home? Want To Ask A Builder The Right Questions - Not The Dumb Ones!

These are real builder questions that I got from readers... Read More

Writing on the Wall - Are REITs a Better Investment for You?

When I was a young child I had many annoying... Read More

Real Estate Web Design - 3 Items You Must Include on Your Site

Real estate web design requires you to do things a... Read More

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things FirstConsidering investing in property? What... Read More

3 Strategies For Buying Property With No Money Down

Everyone has heard a story or read about someone who... Read More

Sell Your Home Without Paying Any Commissions

All of us know that real estate commissions can work... Read More

Advantages and Disadvantages to Selling a House on Your Own

As with any business transaction, there are pros and cons... Read More

No More Estate Agent Fees

Follow a few simple guidelines, and marketing your own home... Read More

Bulgarian Property Market Insight

GOLF GRABS BULGARIA!At the present time there are only three... Read More

Five Things to Help Sell Your Home Fast, and For More Money

Selling your home requires some thought and a clear plan... Read More

How To Best Negotiate A House Deal

Whether it's selling your home or buying a home, more... Read More

How to Research and Purchase a Good Investment Property

How much do you really know about investment property? Accurate... Read More

Miami Property Booming for Foreign Investors

Miami tourism is growing and so is the Miami property... Read More