Keeping Your Payor Happy...
What’s the worst that could happen?
There are few problems that will come from a well created and well managed mortgage note. However, if the right steps are not taken there are headaches waiting for you out there.
You should start by presenting a well cleaned property at the time of sale.
The next thing to think about is who you are selling to. That’s right, start with someone responsible to begin with and it won’t be too difficult to keep them happy. As the lender, you have every right to check their credit, payment record and background.
If your payor does not respect you as a professional then the likelihood of problems is higher.
When you present the option to buy be sure and get a down payment. This way if they do default you will have the cash you need to take you through the foreclosure process. The worst would be for them to stop paying and then stay in the house causing damage before you have to physically remove them.
So what about default?
If they do decide to stop paying then a good relationship will pay off. If you have been fair and friendly with your payors then you can offer incentive for them to leave the house in good condition if they have to move out.
For example, if they are no longer able to make their payments you can offer to give them $500 cash to leave the house in good condition when they leave. This is better than ending up with a beat up house and thousands of dollars in damage. Of course if you have created a good rapport with them then there may be another solution.
You can make adjustments to, or Restructure, the note that would make it easier for them to make the payments and stay in the home. This can be a short term change or permanent.
What kind of changes can be made?
Basically anything that is agreed upon by both parties is doable.
You may be able to lower the payment for just one or two months allowing the payor to get back on their feet. This type of modification should be explained as a one time option and a temporary one. After the small grace period the terms return to normal.
One other option is to change the term or interest rate on the note permanently. This would give the payor lower payments for the remaining term of the note.
It's important to remember that whatever changes are made should be recorded and if you feel that you will ever possibly need to sell the note for cash then make such adjustments carefully... you don’t want to lower the value of the note.
A Friendly Relationship!
Obviously, if you have a good relationship with the person who is making payments to you each month you will have less stress about payment worries. Keeping a healthy relationship with your payor will keep your investment strong.
It will also make it easier to make adjustments if needed on the note later on. So help them be happy about bringing you your money each month.
There are few problems that will come from a well created and well managed mortgage note. However, if the right steps are not taken there are headaches waiting for you out there.
You should start by presenting a well cleaned property at the time of sale.
The next thing to think about is who you are selling to. That’s right, start with someone responsible to begin with and it won’t be too difficult to keep them happy. As the lender, you have every right to check their credit, payment record and background.
If your payor does not respect you as a professional then the likelihood of problems is higher.
When you present the option to buy be sure and get a down payment. This way if they do default you will have the cash you need to take you through the foreclosure process. The worst would be for them to stop paying and then stay in the house causing damage before you have to physically remove them.
So what about default?
If they do decide to stop paying then a good relationship will pay off. If you have been fair and friendly with your payors then you can offer incentive for them to leave the house in good condition if they have to move out.
For example, if they are no longer able to make their payments you can offer to give them $500 cash to leave the house in good condition when they leave. This is better than ending up with a beat up house and thousands of dollars in damage. Of course if you have created a good rapport with them then there may be another solution.
You can make adjustments to, or Restructure, the note that would make it easier for them to make the payments and stay in the home. This can be a short term change or permanent.
What kind of changes can be made?
Basically anything that is agreed upon by both parties is doable.
You may be able to lower the payment for just one or two months allowing the payor to get back on their feet. This type of modification should be explained as a one time option and a temporary one. After the small grace period the terms return to normal.
One other option is to change the term or interest rate on the note permanently. This would give the payor lower payments for the remaining term of the note.
It's important to remember that whatever changes are made should be recorded and if you feel that you will ever possibly need to sell the note for cash then make such adjustments carefully... you don’t want to lower the value of the note.
A Friendly Relationship!
Obviously, if you have a good relationship with the person who is making payments to you each month you will have less stress about payment worries. Keeping a healthy relationship with your payor will keep your investment strong.
It will also make it easier to make adjustments if needed on the note later on. So help them be happy about bringing you your money each month.
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