Any mortgage still on the home when sold will be paid out of the funds at closing by the title company. I have bought several notes this way and have not been able to buy some because the note was not worth enough to pay off the first mortgage to put me in first position. The home owner may or may not end up with any cash at closing, it will depend on what the amount of the first mortgage is.
This would be the same with a partial. The note holder would have to sell enough payments to cover the first position note or he would not have a deal.
I was introduced to the paper business, just about a month ago and I have been following this site for some time now . I have one nagging question.
When a homeowner carries back a note in order to sell his home . and then sells that note in a simultaneous closing to an investor. what happens to the balance that was owed on the home, assuming there was one? And how does the home owner profit?
before answering this question just take for granted that the investors investment to value ratios were all in line.
This question really nags at me especialy with partials.
Thank you for any input you may give me, now and in the future I am sure I will have a million questions.