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Mortgage Buyers
would like to acquaint you with our unique service to Owner Financed
Mortgage Note Holders & Settlement Receivers.
Mortgage Buyers is
in the Business of Buying existing Real Estate Contracts, Mortgage
Notes and Deeds of Trust, in the United States. We convert
long term income into cash now. You get the cash in
hand today that you wanted when you sold your property. We also
work with Structured Settlements that dribble payments in monthly
or have future payments pending; we can convert those payments
into a lump sum today.
Ultimately, you are
searching for security for your money or investments. Your
immediate situation may not be fulfilling this for you. What
service we would actually be doing for you, is giving you cash up
front for the purchase of payments that you may never receive.
Discount Mortgage Fundamentals
Many people are not aware
of the fact that a substantial number of Real Estate transactions
are completed through seller carry backs. This is where the
seller, rather than a bank or other institutional lender, provides
the financing for the purchase. They do this through the carrying
back of a note, which is secured by the property. Often times the
seller will take a first lien, or priority position with respect
to the property, although in some cases the seller has been forced
to take a second lien position in order to help complete the
transaction. Many of the purchasers who require seller financing
are well qualified but have been unable to obtain institutional
financing for a variety of reasons. This is particularly true in
today’s economy where financial institutions have become
increasingly stringent in providing financing to individuals.
The majority of these transactions are secured
by residential properties; however, seller carry back financing is
becoming more and more prevalent with multi-family and commercial
properties. This is because institutional lenders have virtually
stopped providing purchase money financing for such properties,
even when they are well secured and the purchasers are highly
qualified.
Over the past few years a secondary market has
evolved for institutional investors who provide purchase money
financing. Historically, these institutions were interested in
holding the loan for the entire term, but as interest rates
climbed in the late 70’s and early 80’s, these lenders suffered
serious declines in the value of their loan portfolios because the
yield on their loan was well below market. Accordingly, the
financial industry has developed a secondary market for
institutional lenders to resell their loans shortly after they are
originated. This allowed them to avoid the financial risk of
holding them on the long term basis, and it provided them with
renewed funding for further lending.
Even with the evolution of a secondary market
for the resale of purchase money loans made by institutional
lenders, no organized secondary market has developed for seller
carry back financing. In most cases, individuals holding paper
would prefer to receive cash for their note, but they do not know
how to accomplish this. Even those individuals who wanted to carry
back the paper on a long term basis will have events that occur in
their lives which might make it necessary, or desirable for them
to sell their notes…
Simultaneous
Closings
The phrase "Simultaneous
Closing" is used to describe transactions that occur when the
seller is carrying back a note, as payment for their property,
with the specific intention of selling the note for cash. In other
words, "Simultaneous Closing" just means, during an escrow
closing, that there are two (2) separate closing transactions
happening at the same time.
Documents are signed and:
1. Buyer gets Title of Property & Seller
Receives the Mortgage Payments
2. We buy the Mortgage Payments from Seller for
Cash - Assignment
The Advantage is the Seller gets Cash up front
for payments that may never materialize. The buyer then pays us
the mortgage payments. The Seller is then out of the transaction
altogether.
Time Value of Money
This concept involves both
the "cost" of money and "when" money flows in, or is paid out.
Time value of money says that a dollar today does not have the
same value as a dollar ten years from now.
Here are a couple good examples of the time
value of money:
1. Thirty years ago, a soft drink would have cost you a nickel.Today, you will probably have to pay closer to
a dollar.
2. Twenty years ago, you could have gone to see
a movie for roughly one dollar. Today, you will pay around six
to eight dollars for that same movie.
Future Value
The future value is the
worth, at a specific point in the future, of an amount that is to
be received or paid today. Through the process of compounding, a
current investment will "grow" or increase in value over time.
Consider this example.
A new $10,000 trust deed at 10% (per annum)
interest with a one-year maturity will pay $11,000 at the end of
one year. Thus, $11,000 is the future value of your $10,000
investment today…
Present Value
Present value is just the
opposite of future value. It is the worth today, of an amount to
be received (or paid) in the future. In the same example as above,
the $10,000 beginning amount is the present value of the future
$11,000 assuming that the investment is to earn 10% per annum.
Click here for a
Glossary of Terms
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