How to Sell a Mortgage Note in Texas: Complete Guide

If you hold a mortgage note in Texas and you have been thinking about converting it into cash, you are not alone. Thousands of note holders across the state find themselves in a position where receiving a lump sum today makes more sense than waiting years for monthly payments to trickle in. Whether you created the note when you sold a property with owner financing or you acquired it through an inheritance or business transaction, the process of selling that note is more straightforward than most people realize.

Texas has one of the most active real estate markets in the country, and that activity extends to the secondary market for mortgage notes. Buyers are actively looking for well-structured notes backed by Texas real estate, which means sellers often have more leverage than they think. The key is understanding how the process works, what affects your note's value, and how to find a reputable buyer who will give you a fair deal without dragging things out for months.

This guide walks you through everything you need to know about selling a mortgage note in Texas in 2026. From understanding what your note is actually worth to choosing between a full sale and a partial sale, you will have a clear picture of your options by the time you finish reading.

What Is a Mortgage Note and Why Would You Sell One?

A mortgage note is the legal document that represents a borrower's promise to repay a loan used to purchase real estate. When you sold a property using owner financing, you essentially became the bank. The buyer makes monthly payments to you, including principal and interest, over an agreed-upon term. The mortgage note is the written evidence of that agreement, and the deed of trust or mortgage secures it against the property itself.

There are plenty of reasons why a note holder might decide to sell. Some people get tired of tracking payments every month, dealing with late payers, and worrying about whether the borrower is maintaining the property. Others face a life event that makes a lump sum of cash far more valuable than a stream of future payments. Medical expenses, retirement planning, a new business opportunity, or simply wanting to simplify your financial life are all common motivations.

The important thing to understand is that selling your mortgage note is perfectly legal and happens every day across Texas. You are not doing anything unusual or risky. You are simply transferring your right to receive those future payments to a buyer in exchange for cash today. The borrower continues making the same payments under the same terms — the only thing that changes is who receives them.

How the Mortgage Note Selling Process Works in Texas

The process of selling a mortgage note in Texas typically follows a predictable sequence, and most transactions can be completed in two to four weeks when you work with an experienced buyer. Here is what you can expect at each stage.

Getting a Quote

The first step is reaching out to a note buyer and providing basic information about your note. This includes the remaining balance, the interest rate, the monthly payment amount, how long the borrower has been paying, and details about the property securing the note. A reputable buyer like Longhorn Note Buyers can typically provide you with a cash offer within 24 hours of receiving this information.

You do not need to commit to anything at this stage. The quote is simply a starting point that tells you what your note is worth on the open market. If the number works for you, you move forward. If it does not, you are free to walk away with no obligation.

Due Diligence

Once you accept a preliminary offer, the buyer conducts due diligence on the note and the underlying property. This involves verifying the payment history, reviewing the original loan documents, ordering a title search, and getting a current valuation of the property. The buyer is making sure that the note is what it appears to be and that the collateral is solid.

During this phase, you will need to provide copies of your documents. Having your original promissory note, deed of trust, payment records, and any correspondence with the borrower organized and ready to go will speed things up considerably. If you need guidance on what paperwork is required, take a look at this guide to the documents needed to sell a note in Texas.

Closing the Sale

After due diligence is complete and everything checks out, the buyer prepares the closing documents. These typically include an assignment of the note and deed of trust, which legally transfers your rights to the buyer. A title company or closing attorney handles the paperwork to ensure everything is recorded properly with the county.

Once you sign the closing documents, the funds are wired to your account or a cashier's check is issued. The borrower is notified that future payments should be sent to the new note holder. From your perspective, the transaction is done — you have your cash, and you no longer have any obligations related to the note.

What Determines the Value of Your Mortgage Note

Not all mortgage notes are created equal, and understanding the factors that influence your note's value will help you set realistic expectations and potentially increase what you receive. Several variables come into play when a buyer evaluates your note.

Interest Rate and Terms

The interest rate on your note has a direct impact on its market value. Notes with higher interest rates are generally worth more because they generate greater returns for the buyer. Similarly, the remaining term of the note matters — a note with 25 years of payments remaining represents a different value proposition than one with only 5 years left.

The payment structure also plays a role. A fully amortizing note with consistent monthly payments is the simplest to value. Notes with balloon payments, adjustable rates, or irregular payment schedules require more analysis and may be priced differently. For a deeper dive into what drives note pricing, check out this explanation of what determines note value.

Payment History and Borrower Performance

A borrower who has made every payment on time for two or more years demonstrates reliability, and that track record makes your note significantly more attractive to buyers. This concept is known as "seasoning" in the note industry — the longer the history of consistent payments, the more confidence a buyer has in the note's performance going forward.

Conversely, a note with a history of late payments or one where the borrower is currently behind will be worth less. That does not mean you cannot sell it, but the buyer will factor in the additional risk when making an offer. If your borrower has stopped paying altogether, you still have options, but the pricing will reflect the situation.

Property Value and Loan-to-Value Ratio

The property securing your note serves as the buyer's safety net. If the borrower stops paying, the buyer can foreclose and recover their investment through the property. For this reason, the current market value of the property and the loan-to-value ratio are critical factors.

A note where the remaining balance is 60 percent of the property's current value is much more attractive than one where the balance is 95 percent of the property's value. The lower the LTV ratio, the more equity cushion exists, and the more a buyer is willing to pay for the note.

Location and Property Type

Texas is a big state, and property values vary dramatically from one area to another. A note secured by a property in the Houston metro area will generally be valued differently than one secured by remote acreage in West Texas. Urban and suburban properties in growing markets tend to support higher note values because they are easier to sell in a foreclosure scenario.

The type of property matters as well. Notes secured by single-family homes or improved residential properties are typically the most desirable. Notes on raw land, while still sellable, often carry a steeper discount because raw land is harder to liquidate.

Full Sale vs. Partial Sale: Choosing Your Path

When you sell a mortgage note, you do not necessarily have to sell the entire thing. You have two primary options, and the right choice depends on your financial needs and goals.

Full Purchase

In a full purchase, you sell your entire interest in the note. The buyer takes over all remaining payments, and you receive a lump sum that represents the present value of those future payments. This is the cleanest option — you walk away with cash and never think about the note again.

The trade-off is that you will receive less than the total remaining balance on the note. This is because the buyer is paying you today for money they will not fully collect for years or even decades. The difference between the remaining balance and the purchase price is known as the discount, and it is a normal part of every note transaction. You can learn more about how the discount works when selling a note.

Partial Sale

In a partial sale, you sell only a portion of the remaining payments. For example, you might sell the next 60 monthly payments to a buyer while retaining the right to receive all payments after that. This allows you to get a chunk of cash now while keeping a portion of the income stream for the future.

Partial sales can be attractive because the discount on a partial is often smaller in percentage terms than on a full purchase. The buyer is taking on less risk since they are only buying a fixed number of payments, and you still retain an interest in the note. If you are not sure whether a full or partial sale is right for your situation, a good buyer will walk you through both scenarios so you can make an informed decision.

Common Mistakes to Avoid When Selling a Mortgage Note

Selling a mortgage note is not complicated, but there are pitfalls that can cost you money or cause unnecessary delays if you are not aware of them.

Not Shopping Around

The first offer you receive may not be the best one. While you do not need to contact a dozen buyers, getting at least two or three quotes gives you a sense of the market and ensures you are getting a fair price. That said, the highest offer is not always the best deal — you also want to consider the buyer's track record, their close rate, and whether they can actually fund the transaction.

Having Incomplete Documentation

Missing or incomplete documents are the number one cause of delays in note transactions. Before you start the process, gather your original promissory note, the recorded deed of trust, a current payment history, proof of insurance on the property, and any modifications or amendments to the original terms. Having everything organized upfront signals to the buyer that you are serious and makes the entire process smoother.

Ignoring Tax Implications

Selling a mortgage note can create taxable events, including capital gains and recaptured depreciation depending on how you originally acquired the note. It is worth having a brief conversation with a tax professional before you finalize a sale so you understand the implications. Being surprised by a tax bill after the fact is never a good feeling. For more details, read about the tax implications of selling a note in Texas.

Falling for Unrealistic Promises

Be cautious of any buyer who promises you full face value for your note or guarantees a specific price before reviewing any of your documentation. No legitimate buyer can make those claims because the value of every note depends on its unique combination of terms, payment history, borrower profile, and property characteristics. A credible buyer will ask questions, review your documents, and then give you an honest number.

Why Texas Note Holders Trust Longhorn Note Buyers

With over four decades of experience buying promissory notes — Nick McFadin has been purchasing notes since 1983 — Longhorn Note Buyers understands the Texas real estate market at a level that few competitors can match. The company has purchased more than $47 million in notes, maintains an A+ rating with the Better Business Bureau, and backs every quote with a 100 percent close rate. When they give you a number, they stand behind it.

What sets Longhorn apart is the speed and simplicity of the process. You can receive a cash offer within 24 hours of submitting your note details, and most transactions close in just a few weeks. There are no hidden fees, no bait-and-switch tactics, and no pressure to make a decision before you are ready.

Ready to Sell Your Note?

If you are holding a mortgage note in Texas and you are ready to explore what it is worth, the next step is simple. Contact Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to get your free, no-obligation cash offer within 24 hours. Whether you want to sell the entire note or just a portion, the team at Longhorn will walk you through your options and help you make the decision that is right for your situation.

Frequently Asked Questions

How long does it take to sell a mortgage note in Texas?

Most mortgage note sales in Texas close within two to four weeks from the time you accept an offer. The exact timeline depends on how quickly you can provide documentation and whether there are any title issues that need to be resolved during due diligence. Working with an experienced buyer who handles the process efficiently can shave days off the timeline.

Will selling my note affect the borrower?

No. The borrower's loan terms remain exactly the same — the same interest rate, the same monthly payment, and the same payoff date. The only change is that the borrower sends their payments to a new address. They will receive a formal notification about the transfer, but nothing about their obligation changes.

Do I have to sell the entire note or can I sell just a portion?

You have the option to sell the entire note for a full lump sum or to sell a partial interest, which means you sell a set number of future payments and retain the rest. Many note holders prefer partial sales because they can access cash now while keeping a portion of their income stream intact for later.

Is there a minimum note balance required to sell?

Most note buyers prefer to purchase notes with a remaining balance of at least $10,000 to $15,000, although this varies by buyer. Smaller notes can sometimes be sold, but the transaction costs relative to the note size may make it less attractive for both parties.

What happens if my borrower has missed payments?

A note with missed payments can still be sold, but the price will reflect the additional risk. Buyers factor in the likelihood of continued delinquency and the potential cost of foreclosure if the borrower does not resume payments. If the note is significantly delinquent, you may want to explore your options before the situation deteriorates further.