When people hear about real estate, they rarely know enough about it to have an intelligent conversation. Real estate is basically anything that you see as a structure, and in reality, the real estate is not the structure itself, but the piece of land where the structure is located. There are many different ways of making money and getting involved in the real estate game. In this article we will be discussing some of those ways such as Selling Mortgage Notes – Land & Real Estate Contract Buyers.
Mortgage Notes, Land, and Real Estate Contracts
According to Wikipedia, a mortgage note, in the U.S. is a promissory note that is secured by a specific mortgage loan. This means that either a bank or an individual loaned money to someone in order to purchase a piece of real estate, whether it was land, a single-family home, and apartment, or some other type of real estate. Most likely, this mortgage note has or had an interest rate attached to it, which can be found in the original promissory note.
For example, if someone gave a loan of $100,000 as a promissory note to be backed by a single-family home, at 12% interest for 5 years, then the person who took the loan is paying $12,000 per year for that note in interest. Because this note is creating income for the holder, he or she can then go and sell it to someone else. The note has what is called a “lien” on the property, so the holder must be paid no matter what.
When going into a contract for any type of real estate transaction you have to be really careful with the terminology so that you understand exactly what it is that you’re getting into. Lots of people have been scammed in the past, lost all of their life savings, and have been sued for little mistakes and for not being diligent when reading the contract to which they were given thousands of dollars to. You need to thoroughly review and get legal advice on the following items:
1) The financial and legal terms of the financing
2) Asking Financial assistance from the seller
3) Who will end up paying the closings costs, and how much they are
4) The section on property inspections
5) The date when the closing will take place
In conclusion, in this article we discussed some of the different aspects of real estate such as notes, land, and real estate contracts. It is essential to understand the terms of any language in order to be able to speak intelligently with others who already know the language. Real estate has its own language, and it is fluently described in each section of a real estate contract so make sure that you have a good legal real estate adviser on your side. If you understand the contract, the financial risk and reward, and want to invest in mortgage notes, do it.