A mortgage note is proof that there was a debt made for a piece of land or property. When a person puts his property for mortgage, it’s like saying that if he is unable to pay, then the property will be the one to repay the fee or cost that the debtor was unable to pay for. Some people sell their mortgaged land or property and are called mortgage notes.
First, contact a mortgage broker. They can be found online, in newspaper ads, or in the local phone directory. It might also be helpful to ask friends and colleagues for referral as trust is already built in. The mortgage broker’s job is somewhat like a matchmaker as his role is to find which note best suits the client.
It is good practice to carefully go through the mortgage note with the broker. Since it will come with some terms, it is best to ask the broker what they mean and how to go about the investment. The broker is supposed to discuss the investment opportunities and the rate of interest as a return on the investment. It would also be helpful to contact the bank or firm which processed the note for better understanding and practical advice.
When buying a mortgage note, a promissory note is required. This formalizes the agreement and makes it bound to legal terms, which is safer since the former owner will have to pay the new lender (the one buying the note) a certain amount of money. The promissory note should also include all the terms and agreements that are written on the note.
When buying these kind of notes, a third and unbiased party is usually involved and that person is in charge of creating an escrow account. A note broker or real estate broker is someone who is authorized to create an escrow account and manage the funds of the mortgage note.
Once bought, the buyer must deposit the funds into the escrow account and the person that’s managing the account will be responsible for the disbursement of the money to the one who sold it.