What Is The Biggest Factor For Note Discounts?

2010 February 11

I get this question about discounts on notes pretty regularly. The answer is the interest rate with a few small exceptions will have the biggest impact on what’s my private mortgage worth. The lower the interest rate, the less you will be able to sell a private mortgage note for. Compounding this is a long term. So if you have a note with a low interest rate that still has 20 or 30 years remaining (no balloon on the note), expect less than on a note with an above market rate. It’s just a numbers thing due to how note discounts are calculated and it’s true for every private mortgage buyer.

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