PARTIAL
on
Private Mortgage Notes
 

A partial is the purchase of a portion of an income
stream's
remaining payments or the purchase
of a portion of a
specific payment or any
combination of the two.
A note that is not "seasoned" (the number of monthly
payments is low), has a little or no down payment, or a
note in which the payer has a poor credit score may be
purchased as a partial.  In this case, only
a portion
of the note
would be purchased.

Here is an example of a partial:
Sales price is $50,000
Down payment is $2,500

Original note balance is $47,500
Payer's credit score is POOR
Seasoning is ONLY 2 months
Appraised property value is $50,000
Term of mortgage is 360 months
Interest rate is 10%
Remaining payments are 358

A note buyer may offer to purchase the next 200
monthly payments.  If and when all of the payments
are made as scheduled, then the note would revert
back to the seller
following the 200th
payment
.

Note sellers do not know that they can sell just a
portion of their future payments.  A note buyer
can also purchase a portion of the monthly payment
as well.  For example, if the monthly payment on a
note is $1,000, then an offer could be made to pur-
chase $200, $500, $700, etc. of this monthly payment.
 

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