You can calculate an approximate value of your note by using Note Value Calculator.
It takes into account your note maturity date, interest rate, number of payments received.
This estimate would not be final, because the other factors like the credit of the payor, etc. will influence the value of the note.
Once you estimated your note value, can you receive the full remaining balance of your note? The answer is no.
The term “discount” comes into play when you are talking to a note buyer about selling your note.
A discount refers to the difference between the current balance of your note and the cash amount you receive when it’s sold.
If you have a note with a remaining balance of $200,000, a note buyer might offer you $160,000 cash for it.
This means there was a $40,000 discount applied to your note.
A discount is applied to the note sale to protect the note buyer from future risks.
A note that is perceived to be less risky (significant home equity, excellent payment history, good payor credit score, etc.) will have a smaller discount applied.
Another reason for the discount is the time value of money.
You receive cash today in exchange for your notes future payments, that cash is more valuable and, therefore, will cost more.
Usually the more payments made, the lower the discount.
The longer the seasoning, (age of the note) the higher the purchase price.
NoteAdvocate is a free platform providing tools and resources designed to equip note sellers through the mortgage note selling process. Submitting a request into our industry leading Mortgage Note Matching Engine, of course, is the Best Way to Sell Your Note.