Real Estate Notes

A note is not much more than a written promise to pay back money that you borrow for whatever purpose. A real estate note is a written promise to pay back the money, usually with interest that you borrow to purchase real estate. The note not only is a promise to pay, but also can include any details such as how much was loaned, how much interest is going to be paid, how long one has to pay back the money and what happens if you don't pay back the money as agreed upon.

One of the more interesting things about a note is that it can be sold. Lending institutions do this all the time. A bank has a note that is a promise that someone is going to pay them back the money they borrowed with interest over a period of time. This is fine because they will make money overtime with the interest they are charging. It isn't fine if they decide they want the money back all at once. So, they sell the note to another bank or lending institution and they get their money back all at once. The new lending institution starts making money by collecting interest every month from the borrower.

This does not affect the borrower because the conditions of the note stay the same and the payment stays the same. Therefor, the borrower may send the payment to a different place, but the payment stays the same. Some notes are sold more than once, making the buying and selling of notes, a source of investment for many lending institutions and individuals.