Here are 15 things to consider when selling with owner financing and creating seller finance notes.
1. You must have High Credit Score
2. Down payment at the time of closing must equal or exceed the present market equity in the property. This is because the amount of the payment will affect the actual value of the loan.
3. You must have a good payment history (past 12 months).
4. Your seasoning of the mortgage note is important. For instance, the more payments received since its origination will make the mortgage more valuable.
5. Certain geographical Location affects the value, makes it more or less saleable.
6. Appraisal value of the mortgage holder’s property.
7. Curb Appeal
8. Interest rates affects value. In general, the higher the rate the better.
9. Length of terms. Generally, if the person has lesser time to pay, they will receive more money in the sale.
10. Depending on the situation, balloon payments can affect the loan negatively. Which means, if the payer cannot meet the terms of the loan payment, it decrease its value instead of impacting it positively.
11. Good Record keeping. Person must keep good records of payments including deposits, cancelled checks of payments and the like.
12. Note amount. Typically, buyers are looking for an amount that ranges from $50,000 to $500,000.
13. Property Type. The type of property makes a significance difference. Buyers lean more toward single family and owner occupied dwellings.
14. Documentation Type. As new regulations take effect, the document type has become more important over time.
15. Seller must be willing to share relevant data with the seller. The value of the mortgage increases when the seller makes all relevant information readily available to the buyer so that they can make an informed decision (i.e. promissory note, payment records, settlement statements, old title policies, declaration page of home owners insurance, and anything else that can assist them with making a decision to buy).
With this being said, when you review this list, you may want to start by choosing at least 5 Factors That Can Make Your Mortgage Note More Valuable. By focusing on ensuring the first 5 factors meet these criterion, you can make sure that all 15 keys are strategically taken care of within a specified period of time