Advantages and Disadvantages of Selling a Mortgage observe Vs Holding the…

Advantages and Disadvantages of Selling a Mortgage observe Vs Holding the…

In today’s volatile economy, many observe holders are seriously evaluating whether to sell their private mortgage or not. So what are the advantages and disadvantages? Let’s start with the disadvantages.

Disadvantages of Selling a Private Mortgage:

1. First and most obvious, once you sell your observe your monthly income is gone forever.
2. If you had a meaningful gain on the sale of the home that you have spread over the life of the observe, you may have to show all of the remaining gain once the observe is sold. (Consult your tax adviser.)
3. You will take a discount on the remaining observe balance due to the time value of money.

Advantages of Selling a Private Mortgage:

1. You receive a meaningful lump sum of cash, usually very quickly.
2. You can utilize this cash for lucrative business opportunities or just as a cushion for these tough economic times to ease anxieties.
3. You no longer are at risk of a default on the mortgage observe and the hassles of having to foreclosure.
4. You no longer have to worry about whether the mortgagor has paid their character taxes or maintained the home.
5. You don’t have to keep monitoring the tax office to see whether the mortgagor has any new liens on the character from a second mortgage or federal or state taxes, etc.
6. Lastly, you no longer have to keep detailed records on the mortgagor’s payment history or report interest payments to the tax authorities.

Well there you have it, the pros and cons of selling a mortgage observe. Good luck with your decision.

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