FAQ
What is a mortgage note?
A mortgage note, also known as a promissory note or mortgage promissory note, is a legal document that binds someone to repay their mortgage within an agreed upon period. The note outlines the terms of your lending agreement including the monthly payment, the interest to be paid, and what happens if the loan is not repaid.
Do I own the house?
No, if you are purchasing the note as an investment, you do not own the house. You are purchasing the mortgage note and the rights to collect the payments outlined in that note. The house is retained as collateral for the length of that note. If the payments were not made in accordance with the note, then you would have to right to foreclose on the property in order to collect on debt owed to you.
What is my return?
Returns can vary on each investment and every note is different but most of our investors receive over a 9% return.
Who collects the payments?
We set up all of our notes with a third party note servicer. The note servicer will collect the payment from the borrower, hold escrow for taxes and insurance, and send your principal and interest payment to you. This is set up at the beginning of the loan and is paid for by the borrower.
Do you use an RMLO?
Yes, we use an RMLO (Residential Mortgage Loan Originator) to create our mortgage notes. An RMLO must meet federal and state requirements to originate mortgage loans. They are licensed by the state and make sure loans are in compliance with state and federal guidelines.
Who is your typical borrower?
The typical borrower is a local family with ties to the area. Many have little to no established credit (This does Not mean they have bad credit). Most are dual income families with little to no fied debt other than the home.
Can I invest through my IRA or 401K?
Yes, many of our investors use their IRAs or 401Ks to purchase investments from us. This does depend on which type of IRA or 401K you have but many will allow you to add real estate investments to your portfolio.
What happens if the borrower stops paying?
If the borrower stops paying, you have some options. Some borrowers will sign a Deed in Lieu of foreclosure. This is basically them signing the house over to you. You can foreclose on the house. Texas is a non-judicial state and the foreclosure process is much faster than in many other states. Once you are the owner of the house you can sell the house, rent the house, or do anything you want with it. In the event that a borrower stops paying we are happy to assist you in any way we can to help resolve the situation.