What you need to know… About Buying Discounted Mortgages

Mortgages, also known as notes or trust deeds have a category called ‘discounted’ mortgages.   Discounted mortgages are bought for a variety of investment reasons.  They can be held as long term investments or resold to other investors for immediate profit.  Even in today’s market discounted mortgages are held as safe and secure future profits. It may seem impossible to see the words ‘safe’, ‘secure’, and ‘profits’ when reading about a subject matter pertaining to mortgages, but be aware that investing is still taking place and people are still making profits.  The most important thing to know as you continue reading this article is that seeking out the advice of your CPA before making any investment decision is still the best advice anyone can provide you.

This article will only be addressing two key components of buying discounted mortgages.  For more in depth coverage speak with your mortgager, CPA, bank, real estate professionals, and further investigate the possibilities through the Internet How to Buy Discounted Mortgages

If you want to buy discounted mortgages the first real step is to educate yourself and network your way to success.  Make friends with real estate professionals.  Begin by cultivating a mortgage garden of real estate agents and brokers.  Since there is no ready-made market for discounted mortgages, the first person a mortgage holder would think to call is someone in the real estate business.  By making friends with several real estate professionals and letting them know of your interest in purchasing discounted mortgages, you’ll uncover a never ending supply of discounted mortgages.  One of the most important things you can do at this point in your venture is to initiate a process for identifying where your trust and your investment is best supported.

The next step is checking the credit history of the mortgagor before buying any discounted mortgage.  Carefully check the credit rating and credit history of the mortgagor as they are the person who will be responsible for making the payments on the mortgage.  Since the mortgagor has been making payments to the mortgage seller for some time, it is important to obtain verifiable proof of the timeliness of the payments.  If you have over $15, 000 of total investment capital, discounted mortgages should be a serious consideration.  However, don’t invest more than 30% to 50% of your capital in mortgages, since your investments can be tied up from two to ten years.  Have your attorney (or an attorney) handle the mortgage transfer and record the mortgage at the courthouse, giving you a priority claim against most other subsequent loans or mortgages

After collecting all the information on your first potential purchase of a discounted mortgage, and prior to attaining an attorney, contact your tax professional and present them with the information you have collected.  This will require a tax discussion.  You should always consult with your tax professional prior to any investment.  They will apprise you of the tax laws and any timeframe constraints encompassing the purchasing of a discounted mortgage.  Your tax professional will assist you in determining whether this form of investment would produce a negative or positive affect on your tax structure and provide you with a preview regarding the process for filing your yearly tax return.  According to your individual situation your tax professional will be able to advise you and file your returns correctly.

 

 

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