Can I Sell Part of My Mortgage Note? - Alpine West

Owner financing doesn’t have to mean waiting years or decades to receive your money. Sellers have the flexibility to sell all or part of their future payments for cash today, offering two main options:

Option 1: Full Purchase In a full purchase, note buyers acquire all the remaining payments on a land contract, mortgage note, or trust deed. This option provides sellers with a lump sum of cash immediately and relieves them of future responsibilities.

Option 2: Partial Purchase In a partial purchase, note buyers purchase a portion of the remaining payments. This can be structured in two ways:

• Straight Partial Purchase: The investor buys a set number of future payments. For example, if a note has a balance of $90,000 at 9.0% interest, with monthly payments of $1,140.08 over 120 months, an investor might purchase the next 48 payments. After these payments, the remaining payments revert to the seller.
• Split Partial Purchase: The monthly payments are split between the investor and the seller. Using the same note example, the investor might buy $600 of each monthly payment, leaving $540.08 for the seller over the entire period.

Detailed Examples

Full Purchase Example Consider a note with a balance of $90,000 at 9.0% interest, payable in monthly installments of $1,140.08 over 120 months. If the seller sells all 120 remaining payments to an investor, it’s a full purchase.

Partial Purchase Example If the investor buys only the next 48 monthly payments of $1,140.08 each, it’s a straight partial purchase. After 48 months, the remaining 72 payments will go back to the seller. Alternatively, in a split partial purchase, the investor might buy $600 of each monthly payment, leaving $540.08 for the seller for the next 120 months.

Legal Considerations The terms of the transaction are detailed in a Purchase Agreement. This document outlines the servicing arrangement and specifies actions in case of early payoff or buyer default. It is crucial to have competent legal counsel review the agreement to protect all parties involved.

Choosing the Best Option The optimal choice depends on the seller’s cash needs and the value of the payments being sold:

• Partial Purchase: This option can minimize the discount but carries the risk of the buyer’s future payment reliability.
• Full Purchase: Offers peace of mind by providing a lump sum and eliminating future responsibilities.

Get Expert Advice If you’re considering selling your mortgage note, contact us to discuss the options available. Our experts can help you determine the best approach based on your financial goals and needs.