What is a Mortgage, Note, Deed
Mortgage:
A pledge of real property for the security of a debt.
A contract in which a specific property is hypothecated for the performance of an act without the necessity of a change of possession.
Note:
A negotiable promissory note secured by a mortgage on certain specific real estate.
The legal and negotiable evidence of the debt created by the sale of a property on credit and is a written promise to repay.
It states the rate of interest, repayment schedule, and other terms associated with the debt and its repayment.
Deed:
A deed is a conveyance of title to real estate.
Collateral:
An asset ( something of value that is owned ) which is pledged as security to ensure payment or performance of an obligation.
If the borrower defaults, the asset pledged may be taken and sold by the lender to fulfill completion of the original contract.
What is a discounted mortgage:
A mortgage that is sold or purchased for less than its face value
Example:
A mortgage of $91,000 Interest rate 8% Term 30 year Payment of $ 675.00
The holder of the mortgage wants to sell the mortgage to raise capital for whatever reason.
They could e-mail this site, and they will be counseled on how much cash they really need.
As an example the seller reveals that $ 26,000 is what they need.
The seller of the note is told if they sell 60 months of their mortgage note they will receive the money they need.
How this works:
The seller of the note gives up the next 60 months of the payments for the $ 26,000 now.
After 60 months the payments revert back to the seller.
The investor or buyer of the note is willing to pay $ 26,000 to the seller of the note now, and receive the 60 months of payments ( $ 675.00 ).
This figures out to be around a 19% yield for the investor.
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Discounted Mortgages
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Example:
Seller sells 60 months of payments $675.00 to investor for $26,000.00 cash now
Buyer continues to make $675.00 monthly payments, which now go to the investor for the next 60 months
Investor pays Seller $26,000.00 cash and now receives monthly payments of $675.00 for the next 60 months
The $675.00 cash flow each month provides the investor 19% yield for the $26,000.00 investment
Benefits to Seller
Benefits to Investor
$675.00
$26,000
For 60 months of payments
$675.00
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Buyer
Seller
Investor
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Investor
What is a Discounted Mortgage
Author
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WHAT IS THE TIME VALUE OF MONEY
A Large Sum of Money is Worth More NOW than
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