Now that you know about some of the different classifications of mortgage notes, let’s take a closer look at performing notes.
A performing note is current, meaning the borrower has made all of their monthly payments on time. These types of notes are arguably the easiest to deal with; the note owner can simply enjoy the monthly mortgage payments made by the borrower.
The note owner will continue to receive monthly payments for the full term of the loan or until the borrower decides to pay off the loan either through a refinance or a sale of the home. When this happens, the note owner receives the remaining unpaid principal balance as a lump sum. Performing notes can also be re-sold to another investor at any time.
Next time, we’ll discuss an example of how to make a profit investing in performing notes.
To read up on previous posts in our Note Investing 101 series, click the links below.
Note Investing 101
