Selling Part of a Mortgage:
Assume that you are receiving monthly payments on a $250,000 mortgage. You have
been receiving those payments for the past two years and the current outstanding
balance is $240,000. You would otherwise be content to continue receiving those
payments for the duration of the mortgage, but you need to raise $30,000 to pay
for your child’s last year of college. Since you only need $30,000, it might not
make sense to sell the entire mortgage. Instead, it might make sense to sell
only as much as you need to in order to raise the $30,000.
There are two popular ways to sell part of your mortgage. The first way is to
sell a certain number of monthly payments. For example, CEG could buy the next
25 or 50 or 100 monthly payments. In this instance, CEG would give you a lump
sum of cash for the right to receive those payments. At the end of that time,
the payments would revert back to you. You could then choose to continue
collecting those payments, or you could sell more of the payments to CEG.
The other popular way to sell part of your mortgage is to sell part of each
monthly payment. For example, assume that the mortgage is paying you $1,500 per
month. You could sell $250 or $500 or $750 of each monthly payment for a certain
period of time. This method is popular for those who have a cash need but still
need to collect some money each month from the mortgage.