Why Does A Mortgage Buyer Discount A Mortgage To Buy It?

2009 October 19

A lot of owner financed mortgage holders ask this question. I would like to answer it by asking a few questions. First, if someone offered you say $25 today or $100 1 year from now, what would do? Most people would wait for the $100. What about the $25 now or $100 2 years from now? Hummm. Most would still wait for the $100. What about 5 years from now. Now it gets a little tougher. What about waiting 10 years and on top of that you aren’t sure I will still have the money in 10 years (credit risk). Hopefully, I don’t need to carry this scenario out any further to make my point but I would like to make one other point. Many experts believe it is just a matter of time before all the government spending and money supply increases results in significant inflation so them a hundred dollars 10 or 15 years from now may not be worth very much. Just something to think about when you are trying to sell a mortgage note buyer your note.

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