How Much Is Your Seller Financed Mortgage Worth?

You may be able to collect 65% to 85% and sometimes higher on your note depending on the length of term, pay-out due and based on the buyer's credit.
Many do not buy Seconds, Wraps or Flips.
How much is your seller financed mortgage worth? It all depends on several factors:


  • The interest rate on your mortgage

  • Whether it is current or not

  • If it is a first or second mortgage

  • The size of the mortgage to the value of the property (Loan to Value)

  • The credit report of the borrower

  • How many payments you have received (Is the mortgage "aged")

  • The type of property

Value Increased
Equity position of 20% or more

1-10 year maturities, or longer term amortization with balloon


Good borrower credit


Seasoned note with satisfactory payment history


Market interest rate for risk involved Late charge provision in note


Due on sale/right to approve assumptor clause


Financial statement on borrower


First mortgage or large second mortgage relative to first


Step rates which increase interest rate over time (not usual)


Timber cutting clause on acreage properties


Flood insurance required and maintained if property is in flood zone


Professional note collection by third party


Cross default clause in junior liens (default on first mortgage is grounds to default the second, even if current)


Credit report on borrower available and up to date


Reasonable sized mortgage compared to the property value


Well written and structured note and Deed Release provisions


Title insurance available and no exclusions


Value Decreased

Limited equity/Small down payments

Long term fully amortizing obligations (no balloons)

Bad borrower credit

Unseasoned note or simultaneous closing

Below Market interest rate for risk involved

No late charge provision on the note

No due on sale or assumption/Approval right

No Financial statement on borrower

Large amount of debt senior to subject debt (on junior liens only)

Fixed rate note

No timber cutting clause on acreage properties

Property in a flood zone without flood insurance

Seller collects own payments

No cross default clause in junior liens (default on first mortgage can mean second is wiped out and holder of second has no right to default the second, if it is current)

No credit report on borrower and no right to pull one

Small size note or contract

Badly written note

No title insurance

Subordination clause that could force the note into lower priority

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