Partial Vs Full Mortgage Note Sale: How To Get More Money

Full Video Transcript

Introduction

By the end of this video, you will know exactly how a partial mortgage note sale works, why it often pays more per dollar than a full mortgage note sale, and how doing it more than once, selling your note in stages, can net you more money overall.

How a Partial Note Sale Works

Here’s the idea. Instead of selling your entire owner-financed mortgage note, you sell just a portion of it, sometimes called a partial note purchase or a note partial.

We buy a set number of your upcoming payments, just enough to cover whatever dollar amount you actually need. Need $25,000 to buy a boat, pay off a bill, make an investment, or cover a specific expense? Well, we buy enough payments to get you there.

All future payments afterwards revert back to coming to you.

Why a Partial Often Pays More

And here’s the part that surprises people. Selling part of your mortgage note often pays at a higher percentage than selling the whole note outright. Every note is different. Pricing depends on things like the borrower’s credit, the down payment, the interest rate, and the remaining term.

But here’s how the math can work. If a full note hypothetically gets priced at 75%, a partial note purchase on that same note may be priced hypothetically somewhere in the 80 to 85% range.

The reason is risk. The note buyer is only exposed to that shorter chunk of time, so there’s less that could go wrong, which usually means a smaller discount for you and more money in your pocket.

Selling Your Note in Stages

And this is where it gets powerful. You are not limited to doing this just once. Once that first set of payments sold to the note buyer runs out, the rest of your payment stream comes back to you, and you can sell another partial on however many payments are still left. There is no limit. It just depends on how many payments remain.

The second and the third partials usually move a lot faster since we already have all your documentation on file. And if the borrower has been paying on time with us, that track record can actually get you an even better price on the next note due to decreased risk.

A Real Example

We’ve seen this work in real situations, including one note holder who was about to lose a property due to foreclosure. A partial sale paid off the underlying lien holder and stopped the foreclosure immediately.

A year and a half later, after the borrower had been making on time payments, things had stabilized. So, we bought the rest of the note in a second partial.

What to Know Before You Move Forward

One important thing to know, we have to move into first lien position. So, the first partial note sale typically needs to pay off any existing lien in full.

And if the borrower ever stops paying, that’s a real risk worth understanding before you move forward.

Is a Partial Sale Right for You?

If you don’t need every dollar from your note today, selling your seller-financed mortgage note in stages instead of all at once could be a smart financial move.

Give us a call or fill out our free note review form on our website, and we will help you figure out whether a full sale or a partial sale fits better for your specific note and situation.

Remember, Moxxie Asset Group is THE source for seller-financed note education. Thank you.