Five Seller-held Mortgage Note Benefits for the Housing Slump

While the housing market underperforms for other investors, DMO Direct Funding enjoys persistent success in the field of seller-held instruments like mortgage notes, land contracts and trust deeds. Unlike a traditional, institutionally-managed mortgage, a seller-held mortgage takes place between the lender (and seller) and borrower (new owner). The seller agrees to finance the sale of his own property by taking the remainder in installments. These are often monthly payments like a traditional mortgage, but can include numerous other options to fit either the buyer or seller’s preferences. There are some disadvantages to this process. The seller needs to be diligent with legal matters and a good judge of character, and should be prepared to use all legal means to recover full payment should something go awry.

Nevertheless, seller funding has advantages that have made it an increasingly popular choice for people interested in investment income, especially in the face of a sickly traditional mortgage market. DMO has identified four points that make seller funding an attractive option right now.

Custom Agreements: A seller-financed loan has remarkable flexibility, limited only by applicable laws and your own prudence. This makes seller funding ideal in situations where a property has unusual characteristics, including shared features, lake access or usage restrictions imposed by government or private agreements. Institutional pricing is frequently inaccurate when it comes to these unusual features, which makes your property less competitive in the market. Since you have full control of a seller financing agreement you can sidestep these issues and set a price based on your own research.

Flexible Payments: Seller financing allows you to implement a number of different payment options. You may want money sooner rather than later, so you can build in incentives for the borrower such as balloon payments. These options also increase the property’s appeal in the market.

More Aspiring Property Owners: A seller-financed agreement gives you access to a larger pool of possible buyers – as many as you’ll accept. One thing to look for is people who are left out of the loop for traditional mortgage eligibility requirements, but who can still reliably make payments. This group includes successful business owners and people with stable incomes but minimal credit histories. Banks are reluctant to approve suitable mortgages for these groups and others, and for good reason: they share characteristics with groups that would be credit risks. Banks have to implement cookie cutter policies, but you don’t. You can look at buyers as individual cases.

Personal Risk Assessment: One of the intimidating aspects of seller financing is that the risk is yours to assess. This is way analysts recommend research and legal assistance before considering this option. Nevertheless, this is a serious advantage compared to other investments because you have as complete knowledge as possible of your investment. Every clause has passed muster with you, and the relationships involved are ones you’ve freely chosen. This is a far cry from investment finds and other institutional programs.

Salability: Managing a seller-financed property loan entails a significant amount of responsibility, but fortunately, it’s possible to act on any second thoughts you may have further down the line. DMO Direct Funding is one company that purchases privately held mortgage notes, allowing holders to turn their notes into immediate payouts without the attached burdens. This makes a private mortgage note, land contract or trust deed an excellent option for anyone worried about larger future expenses. Cashing out a well-managed note is a relatively simple process, as companies like DMO offer free, no-obligation quotes to inform you of your options.