Note pricing check — 4-5% performing notes, volume deal

[Jason Weisberg]

Looking for feedback from note buyers.

I'm building a seller financing business and will be originating 20-50 performing first-lien notes per year. Here's the profile:

• 4-5% interest rate
• 7-year balloon, 30-year amortization
• 75-84% LTV
• Owner-occupied SFR
• 700+ credit borrower
• ATR-compliant

Questions:

1. What percentage of balance would you offer on notes like this?
2. Does 5% rate price better than 4%?
3. Does 75% LTV price better than 84%?
4. Would a 6-year balloon improve pricing vs 7-year?
5. Anyone interested in a standing deal?

DM me or reply here.

[Patrick Roberts]

Quote from @Jason Weisberg:

Thanks Rick! 

One more for @Patrick Roberts to tear to shreds:

11% interest rate
$487,500 principal
Secured by $650K home (75% LTV)
Borrower pays $1,625/mo remainder accrues
Balloon of $692K in 6 years

Average price? 

 None. Negative amortization and a balloon on owner occupied = high likelihood of a lawsuit and a really bad idea. Rick's model is the way to go.