If you’ve ever taken out a loan to purchase a home, you probably sent your payments to the financing bank for a few months. Then, mysteriously to you, that bank sells your loan to another financial institution (e.g. Bank of America, Wells Fargo, …), at which point you start sending your payments to the new bank.
What you may not realize is both banks made money off the deal. Further, if you’ve ever looked at the amortization schedule of your loan, you realize how much interest the bank is making off of you over the lifetime of your loan. Many mortgages are 360 months (30 years) long or 180 months (15 years) in duration. Stated differently, the typical loan (aka Note) associated with a mortgage is a stream of 360 or 180 payments.
partialNotes.com is a company that originates and/or buys loans, often with 300 or more payments remaining. Once the purchase of the loan has been completed, partialNotes.com carves off the front N payments and sells just that part of the loan to other investors such as you. N could be 60 (5 years), 120 (10 years), 180 (15 years), or anywhere in between, based on how long you want your capital deployed. Generally speaking, longer terms pay you better yields.
What’s in it for you? Via partial note investing, you sorta become like the bank: you are now the one earning interest over the duration of the partial loan. Further, most investors do not want their money “permanently” tied up. By purchasing a partial note, you can safely earn a steady rate of return over a long duration. Passive, Risk-Averse, Patient.
What’s in it for partialNotes.com? We make money on the back portion of the note when we resume receiving the payments. We also make some money when we sell you the partial note.
Mortgage payments are typically made once a month; often this is around the 1st of the month. Once the loan servicer has processed the payment, the bank (i.e. you) typically receive payment within a day or two of that. If you’re the type of person who checks on their investments daily, this may drive you nuts; i.e. partial note investing may not be for you. However, if you are a passive, risk-averse, patient investor … please contact us.