Posted by GMann on February 25, 2003 at 13:08:14:
Hopefully she will explain further.
Creating Your Own Mortgage… INPUT PLEASE! - Posted by GMann
Posted by GMann on February 25, 2003 at 11:48:52:
Can someone explain how this works in practice not principal? I can’t get anyone to answer any questions on ANY of the boards. I know you sell it at a discount, but how do you create the note. Who is listed on the note as mortgagee and mortgagor. Is this a legit transaction? Fill us in!! Details, Details.
Thanks in advance!
Re: Creating Your Own Mortgage… INPUT PLEASE! - Posted by JG-PA
Posted by JG-PA on February 25, 2003 at 12:05:38:
The mortgagor is the buyer, the mortgagee is the lender (you). It may sound backwards but the buyer is the mortgagor because he/she is pledging their property as security. As to the details of making the note, you may want to pay a lawyer a one time fee to write you one that fits your state laws and then you can reuse the same contract in the future.
And as to it being a legit transaction, absolutely! It’s your property and therefore your perogative to sell it on a note if you so choose. But check your state banking laws, because like here in PA if you do over a certain amount of these a year you have to get a certain license–i.e. for mortgage origination or something like that
Hope this helps
Let me re-phrase…Please read if responding - Posted by GMann
Posted by GMann on February 25, 2003 at 12:47:18:
Let’s say I am buying a property.
FMV (after repairs) $100K
Purchase Price $50K
Repair Costs $15K
Here’s the real question. I create a note ($65K) were I am the mortgagor and the mortgagee and sell the note to raise the capital to purchase the house. Obviously you would do a simultaneous closing/funding to have ownership.
If this is still unclear please read this article from CRE online.
To Add to that - Posted by JG-PA
Posted by JG-PA on February 25, 2003 at 12:08:50:
One more thing. The reason I suggest having a lawyer give you one is because of things like the Truth in Lending Act where you have to make specific disclosures as to total interest, etc.
Re: Let me re-phrase…Please read if responding - Posted by Flukie
Posted by Flukie on February 25, 2003 at 18:33:44:
I am a total newbie in this area but here’s my understanding of the process.
If you need $65K after the mortgage note has been discounted, you will nee to create the note for more than $65K, e.g. $90K.
E.g. You create a note with yourself as the payee on terms that would be attractive to a note buyer, i.e. interest rate, payment terms, term of the note, etc. Before creating the note you should already have contacted a note buyer to find out what criteria they need in the note so that you can create the note to meet that criteria. You also create a mortgage against the property for the amount of the note.
Approach a note buyer (who you have already prescreened for their criteria) and offer the note and mortgage for sale. They will look at the property (and its appraised value), the payee’s risk profile (FICO, etc), the terms of the note, etc, and make you a discounted offer for the note.
I’m not sure if I got this right but I hope this helps.
Re: Let me re-phrase…Please read if responding - Posted by JG-PA
Posted by JG-PA on February 25, 2003 at 13:00:14:
Sorry but I’m going to have to defer to the experts on this one. After reading the article, I still don’t fully understand how it’s done, but I’ll keep an eye on this thread because it sounds like it could be a great way to buy. As for being legit, the article was written by an attorney so you’d think it would be? Hope someone else can help here.