Profit-Lesson #3:
"We Come To The Rescue!"

Sally is getting a little short on money and she wishes that she could have her money now instead of having to wait 29 more years to get all her money from the sale of her house.

It's Time For The Closing At closing, (a month or so later), Bud Buyer gets possession of the house. Sally Seller gets her $20,000 cash and she also gets a "promissory note" for $80,000 at 10% interest in which Bud Buyer promises to pay her $702.06 for the next 30 years. Instead of Bud getting a regular bank loan and paying the bank every month, he will now send Sally a check. Sally is actually acting as the bank in this instance because she carried back the mortgage. This is what's called a "Seller Financed Mortgage" or a "Seller Carry Back"! The months go by and everything is fine Bud pays Sally on a timely basis. He faithfully mails her a check for $702.06 every month without fail. Sally Is Getting Impatient Now a year has gone by since Sally sold her house and her financial picture has changed. Sally is getting a little short on money and she wishes that she could have her money now instead of having to wait 29 more years to get all her money from the sale of her house. Because Bud Buyer has been paying on the mortgage for 1 year, the money he now owes Sally is down to $79,555.30 (from the original $80,000). Sally thinks, "Boy it sure would be great to have the money right now instead of having to wait all those years." But Sally doesn't know how in the world she can get her money now instead of having to wait 29 more years. Here's Where You Come To The Rescue Sally doesn't realize that she can sell her mortgage note for cash, or that she can sell a part of it if she doesn't need all of the money right now! Amazingly, A Lot Of People Receiving Payments On A Note Don't Realize That They Can Sell The Whole Note Or Part Of It ! Their stockbroker isn't going to buy it, and a bank can't and won't buy a privately held note. That's it for this lesson. In Lesson 4 I'll explain what happens when Sally decides she wants cash now instead of waiting any longer.