Option 2 – When the note buyer purchases just a portion of the remaining payments it is considered a partial purchase.
Here’s a closer look at two examples using the Full and Partial Purchase Options.
The purchase can also involve splitting the monthly payments received from the buyer between the investor and the seller, also known as a split partial. Using the same example of 120 payments of $1,140.08 each, an investor might agree to purchase $600 of each remaining payment leaving a remaining residual of $540.08 to the seller for the next 120 months.
The terms of the transaction are spelled out in the Purchase Agreement. This important document outlines the servicing arrangement along with what happens in the event of an early payoff or default by the buyer. Competent legal counsel should review the agreement to protect the rights of all parties.
The best choice will depend on the cash needs of the seller and the value of the payments being sold.
A partial purchase can help minimize the discount but it comes with the worry of the buyer keeping payments current in the future.
A full purchase can give sellers peace of mind knowing they are through with the property once and for all.
Please contact us if you would like to discuss the options available on your owner financed mortgage note.