A recent look at home buyers’ financing profiles shows that 88% of all buyers finance their purchase. Mortgages come in all shapes and sizes, with varying financing options available. So many options, in fact, that navigating the world of mortgage notes isn’t always easy.
The Emergence of Mortgage Notes
The economic recession of 2008 had a wide and far reaching impact on homeowners. Many people were forced out of their homes as the need to cover everyday expenses trumped that of making a regularly scheduled mortgage payment. As a result, many homes were left abandoned and fell into disrepair. Private, seller back mortgage notes emerged as a way to facilitate post-recession home sales. Benefiting both the buyer and seller, it’s no secret this traditional mortgage alternative continues to rise in popularity.
Following the recession, many folks found themselves not only out of a home, but faced with a lack of viable job prospects and a dwindling credit score. If we’re honest, you’d be hard pressed to find someone who survived the economic downturn unscathed. That said, private mortgage notes rely on seller financing (versus that of a traditional bank), so things like lending requirements, job history and credit score have very little impact – cementing the attractiveness of a private mortgage note.
The benefits extend beyond the buyer, however. As mentioned above, the recession brought with it a wave of neglect that eventually resulted in a plethora of abandoned homes.Those abandoned homes were left to rot while banks scurried to unload them in the hopes of recouping costs. Traditional, bank based mortgages require a thorough inspection, making it next to impossible for sellers to unload a home wrought with damage. Fortunately, a seller backed note can allow the seller to complete an otherwise stalled sale. Win-win! In addition, sellers have the option to sell their private mortgage note at a later date.
Lauren Terfehr is the outreach manager for MortgageNote.org. She builds relationships to connect their site with people who could benefit from the information they provide.When not building relationships, Lauren runs or spends time with her two dogs.
July 29, 2016