If you’re thinking about investing in real estate, being a mortgage owner might not be one of your top choices. In this method, you own the mortgage on a home and you have the right to enforce the mortgage loan agreement. To become a mortgage holder, you can either carry a seller-financed mortgage on a home you currently own, or you can lend money to a separate party so they can buy a home.
Advantages:
Save on closing costs – You can draw a variety of buyers if you’re the one handling the mortgage, including buyers who would not qualify for a bank loan. Owning the mortgage yourself might also lead to a better selling price of your house. According to Note Investor, when a mortgage is held by the owner, closing time is cut down substantially and that in turn leads to lower closing costs.
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Safe investment – By becoming a mortgage holder, your investment is backed by real property. If your borrower fails in making payments, the holder has the right to foreclose and take back the property. Also, to safeguard the value of the mortgage, the lender might require a substantial down-payment from the buyer to protect the holder against any drop in house prices.
Liquidity – If the holder wants to change the loan to cash, he can take advantage of an existing secondary market for mortgage notes. This means that the mortgage holder will not have to wait 20-30 years to get his money if he wants or needs the value of the loan now.
Monthly income – Regular payments from the buyer would result in an increased cash flow for the