If you’ve ever dreamed of achieving financial freedom and want more control over your investments, mortgage notes might just be the key to unlocking those desires. Investing in mortgage notes is a lesser-known investment strategy that has the perks of investing in real estate but without the pains of rental upkeep, market shifts, and hidden construction costs. Let’s break it down and see why you should care about mortgage notes and their potential to transform your financial future.
First off, what are mortgage notes?
You’ve probably familiar with the term “mortgage,” which is a short term for “mortgage note.” If you or someone you know has purchased a home with a loan from a bank— that is a mortgage note!
How do banks make money on mortgages?
A typical mortgage note term is a 30-year, fixed-rate loan, which means the homeowners will have a set interest rate, which will be whatever the current interest rate is at the time of purchasing the home, with monthly payments for 30 years.
Each monthly payment is a set amount that pays towards the principal of the loan as well as interest (aka profit for the bank).
How much do banks make!?
If you’re wondering how much profit banks make off these loans- let’s break it down:
If you were to take out a 30-year fixed-rate mortgage on $100,000 – how much does the bank make??
In 2023 the current interest rate on a 30-year fixed-rate mortgage is 7.49%.
A borrower’s total payments over the 30-year life of their mortgage would be:
Total payments: $251,470.69
Total interest paid to the bank: $151,470.69
If you purchased a home in 2010 you were lucking out with an interest rate of just 4.69%… but still, the bank is making bank on you– profiting $86,492.
Total payments: $186,492.05
Total interest: $86,492.05
In Y2K, if you purchased a $100,000 home your interest rate was probably around 8.05%, and you were paying almost double the price of the home in just interest payment.
Total payments: $265,414.43
Total interest: $165,414.43
And if for some reason you don’t pay… the bank has options to foreclose on the property, which means they now own the property and can do what they want with it-including sell the property or rent it out.
OK, cool… the bank always wins, everyone knows that. Why should I care?
Mortgage Notes Might Be Your Ticket to Financial Freedom
Are you looking for a way to reach your financial freedom through investing? It can be frustrating to search for a reliable investment opportunity. Mortgage notes can make this dream a reality. Investing in mortgage notes allows you to receive regular payments as borrowers make their mortgage payments. You become the bank, enjoying a steady stream of passive income.
Taking Charge: The Need for Control Over Your Investments
One major concern for investors is the lack of control over traditional investments like stocks or mutual funds. You’re at the mercy of market fluctuations and global economic conditions, and that can be nerve-wracking. But with mortgage notes, you hold the reins. You have direct control over your investment and can tailor it to suit your risk tolerance and preferences. Unlike traditional investments, where you’re just another shareholder, investing in mortgage notes gives you the satisfaction of being an active player in your financial journey.
Challenges in Finding Lucrative Investment Opportunities
In today’s competitive market, finding profitable real estate investments can feel like searching for a needle in a haystack. But mortgage notes offer a glimmer of hope. Investing in mortgage notes opens a realm of possibilities, even in a competitive market. By buying mortgage notes directly from lenders, you can uncover hidden gems and secure lucrative investment opportunities that might not be available in the traditional real estate market.
The Quest for High-Quality Investment Options
Every investor craves high-quality investment options that align perfectly with their risk tolerance and investment goals. With mortgage notes, you have the chance to cherry-pick investments that suit your needs. You can choose from various types of mortgage notes, such as performing (the borrower is paying their mortgage every month) or non-performing notes (the borrower is not currently paying), as well as asset classes that match your investment criteria (commercial vs. residential, rental vs. owner-occupied). It’s all about having access to a diversified portfolio that aligns seamlessly with your vision.
What if you could be the “bank?”
The bank always wins… I want to be the bank.
So, why do you even care about mortgage notes? Because they represent a remarkable pathway to achieving financial freedom, offering you more control, flexibility, and diversification in your investment journey. Moreover, they present you with the opportunity to delve into a world of profitable real estate investments that align with your risk tolerance and investment goals.
If you’re ready to take charge of your financial destiny and explore a realm of high-quality investment options, mortgage notes might just be the missing piece of the puzzle. Open your eyes to the potential of mortgage notes and discover the path to a brighter and more secure financial future.
Remember, the road to success starts with education and due diligence. So, keep exploring, and keep learning. Best wishes to you on your investing journey!
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