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How Much Is My Mortgage Note Worth? How Buyers Price Notes
How much is your mortgage note worth? See how buyers price performing and non-performing notes, with a worked example you can follow.
12 min read
Key Takeaways
- A note is worth its present value at the buyer’s required yield — not its unpaid balance.
- Interest rate is a major driver. On the same $50,000 balance and 12% buyer yield, a 6% note and a 10% note differ by more than $7,000 in price.
- Payment history, equity in the property, and remaining term all move the offer you will see.
- Non-performing notes are priced on expected recovery, often the property’s value less costs and time, and they require active management.
- You can estimate your own number in five steps before you list.
If you are asking how much your mortgage note is worth, the answer is the price at which a buyer earns their target yield on your note’s remaining payments. That number can sit below, at, or above the unpaid balance, depending on the buyer’s required yield. It follows a formula you can run yourself.
This guide shows how buyers price performing and non-performing notes, what moves the price up or down, and how to estimate your own value before you list. If you plan to sell, pair it with our guide on how to sell a mortgage note.
Quick Answer
A mortgage note is worth the present value of its remaining payments, discounted at the yield a buyer requires. In a simple model, the price falls below the balance when the buyer’s required yield exceeds the note rate, and equals it when the two match. A non-performing note is priced on expected recovery, which depends on the property, liens, costs, and time.
How Much Is My Mortgage Note Worth?
Your note is worth what a buyer will pay today for the stream of payments it still owes you. The buyer sets that price by choosing the yield they need. Then they work backward to the dollar amount that delivers it.
That is why the unpaid balance is only a starting point. If your note pays 6% and the buyer needs 12%, they must buy at a discount to close the gap. If your note pays the same rate the buyer needs, the price can equal the balance. If it pays more, the price can exceed the balance.
Note value: The present value of a note’s remaining payments, discounted at the yield a buyer requires. It is a price a buyer can justify, not a number the seller sets.
How Do Buyers Calculate a Note’s Value?
Buyers use a present-value calculation. They take each remaining payment, discount it for the time it takes to arrive, and add the results. The discount rate is the buyer’s required yield, not the note’s interest rate.
Price = PV( buyer’s yield ÷ 12, remaining payments, monthly payment )
In Excel or Google Sheets, that is the PV function. The formula =PV(12%/12,57,-500,0,0) returns $21,643.56 for 57 payments of $500 at a 12% yield. A worked example from BiggerPockets lender Mike Hartzog uses the same inputs.
These figures assume a fixed-rate, fully amortizing loan with level monthly payments at month-end. They assume no balloon, servicing fee, or early payoff. Dividing the yield by 12 treats it as a nominal annual rate compounded monthly. A balloon payment must be added separately.
The takeaway is simple. Change the yield, and the price moves. Change the payment or the term, and the price moves again. Nothing about the calculation is mysterious.
What Does That Look Like for a Performing Note?
Take a $50,000 note with 10 years left and monthly payments. The table below shows what a buyer could pay at three required yields, for three note rates. These figures use the same assumptions as above and are illustrative math, not offers.
| Note rate | Buyer yield 10% | Buyer yield 12% | Buyer yield 14% |
|---|---|---|---|
| 6% | $42,005 (84%) | $38,691 (77%) | $35,752 (72%) |
| 8% | $45,905 (92%) | $42,283 (85%) | $39,071 (78%) |
| 10% | $50,000 (100%) | $46,055 (92%) | $42,556 (85%) |
Percentages show price as a share of the $50,000 balance. Read across a row, and a higher buyer yield cuts the price. Read down a column, and a higher note rate lifts it.
Notice the 10% note at a 10% yield. It prices at exactly 100% of the balance. That is the one case where the note rate and the buyer’s yield match.
For context, a 2021 Trust ETC guide describes one investor’s preferences as investment-to-property-value (ITV) ratios, not prices as a share of the balance. It cites 60% to 80% ITV for re-performing notes and at least 85% for performing notes, at yields of 10% to 16%. Treat that as one historical example, not a market benchmark. Its lasting point is that a longer payment record tends to improve terms.
What Factors Change a Note’s Price?
Buyers adjust the required yield, and the price along with it, based on risk. These are the factors they weigh most, and how each tends to move the price.
| Factor | Tends to raise price | Tends to lower price |
|---|---|---|
| Interest rate | Higher rate, closer to buyer yield | Low rate, such as 3% to 5% |
| Equity (LTV) | LTV under about 75% | High LTV, thin cushion |
| Payment history | 12 to 24 months of on-time payments | Late payments, gaps, or none |
| Remaining term | Shorter term, faster payback | Long term, cash returns slowly |
| Borrower profile | Stable income, strong credit | Weak credit, high payment burden |
| Collateral | Well-kept home, strong market | Poor condition, thin local demand |
| Documents and lien | Clean title, complete file, first lien | Missing documents, junior lien |
Two of these deserve a closer look. Equity matters because it protects the buyer if the borrower stops paying. The Gigwise guide calls LTV under 75% generally strong. Payment history matters because it is proof, not a promise. The same guide says 12 to 24 months of steady payments adds real value.
Lien position and paperwork matter just as much. A junior lien can be wiped out in a senior foreclosure, which is why buyers check what sits ahead of them. See our guide on senior lien checks for how that works. Our due diligence guide covers the rest of the file.
How Is a Non-Performing Note Valued?
A non-performing note has stopped paying, so there is no reliable payment stream to discount. Buyers value expected recovery instead. Often that starts with the property: what will it sell for, what will resolution cost, and how long will it take. Buyers may also model a modification, reinstatement, or negotiated payoff. The enforceable debt and any senior liens cap what is recoverable.
Resolution can mean a modification, a payoff, a short sale, or foreclosure, and foreclosure timelines vary by state, court, bankruptcy, and the facts of the case. One to three years is a common planning range. Our guide to exit strategies for a defaulted note walks through each path. Non-performing notes are never passive. They require active management, and buyers price that work in.
Here is an illustrative bid. These inputs are examples only, not quotes or market data.
| Line item | Example amount |
|---|---|
| Estimated resale value (BPO) | $100,000 |
| Less resale and closing costs | −$8,000 |
| Less legal and foreclosure costs | −$7,000 |
| Less taxes, insurance, and upkeep | −$4,000 |
| Net proceeds | $81,000 |
| Divide by 1.3145 (1.20^1.5, a 20% annualized return over 18 months) | ≈ $61,600 maximum bid |
This simplified example treats net proceeds as one cash flow at month 18. Costs paid earlier, such as legal fees and taxes, would need separate discounting. The ceiling here is about 62% of the property’s estimated value. The enforceable debt and any senior liens may cap recovery further. Change the timeline or target return, and the bid shifts quickly.
Institutional sales show how much pricing can vary. In Fannie Mae’s twenty-seventh non-performing loan sale, announced in August 2025, the runner-up (cover) bids were 99.66% and 99.82% of unpaid balance. Those same bids were 48.51% and 50.16% of broker price opinion. Cover bids are the second-highest bids, not winning prices, and these were large institutional pools, so they are not a benchmark for a single retail note. They do show that when a balance is well below property value, bids can approach the balance.
How Can I Estimate My Note’s Value?
You can get a solid ballpark in five steps. It will not replace a real offer, but it tells you whether an offer is reasonable.
Gather the loan terms
Write down the unpaid balance, interest rate, monthly payment, and remaining term. Your servicer statement or amortization schedule has all four.
Pull the payment history
Request a current payment history from your servicer. Buyers price off it, so know what it shows before they do.
Estimate the property value
Use recent comparable sales or a broker price opinion. Divide the balance by that value to get the loan-to-value (LTV) ratio.
Pick a realistic target yield
Match the yield to the risk. A seasoned note with strong equity earns a lower required yield than a thin, recent one.
Run the present value
Discount the remaining payments at that yield. The result is your estimate, which you can compare against real offers.
Run the numbers at two or three yields to see a range. Then compare the range to real bids. If offers land far below your range, check your payment history, documents, and equity first.
How Do I Get a Better Price for My Note?
You cannot change the interest rate, but you can change how risky the note looks. Buyers pay more when risk is easy to see and easy to price.
Do this before you list: attach a current payment history, gather the full document file, confirm your lien position, and add recent property photos. Every unknown becomes a discount.
- Let the record season. A longer run of on-time payments usually earns a better price, if you are not under time pressure.
- Price by yield. A realistic yield draws bids. An asking price built on what you paid does not.
- Disclose known issues. A priced-in flaw still sells. A hidden one often kills the deal.
- Write a clear listing. Our guide to creating a note listing that attracts buyers shows how.
If your note is not drawing bids, read why your mortgage note isn’t selling. Pricing is one of the first things to check.
Valuation Terms to Know
- Unpaid principal balance (UPB)
- The amount of principal the borrower still owes on the loan.
- Required yield (discount rate)
- The annual return a buyer needs. It sets the price of the note.
- Present value (PV)
- What a series of future payments is worth today, after discounting for time and risk.
- Loan-to-value (LTV)
- The loan balance divided by the property’s value. A $140,000 balance on a $200,000 property is 70% LTV.
- Seasoning
- The length of a note’s on-time payment record. More seasoning lowers perceived risk.
- Broker price opinion (BPO)
- A broker’s estimate of a property’s market value, used to value collateral.
Frequently Asked Questions
How much is my mortgage note worth?
A note is worth what a buyer will pay to earn their target yield on its remaining payments. In a simple model, the price is below the unpaid balance when the required yield exceeds the note rate, equals it when they match, and exceeds it when the required yield is lower. Rate, payment history, equity, remaining term, and costs all move the number.
Why do buyers often pay less than the unpaid balance?
Buyers need a return for the risk they take and the cash they tie up. A note paying 6% will not satisfy a buyer who needs 12%, so the price drops to close the gap. Lower rates, thinner equity, and weaker payment history can widen the discount. If a note pays more than the buyer requires, the price can reach or exceed the balance.
How do you calculate the value of a mortgage note?
Find the present value of the remaining payments, discounted at the yield the buyer requires. In Excel, that is PV(rate, nper, pmt) with a monthly rate. For example, =PV(12%/12,57,-500,0,0) returns about $21,644 for 57 payments of $500 at a 12% yield. Use the buyer's yield as the discount rate, not the note's rate. This assumes level month-end payments and no balloon.
What yield do note buyers typically require?
Targets vary by buyer, note, and market. For planning, many investors use a range of roughly 8% to 14% on performing notes. Strong notes with clean history and solid equity sit toward the low end. Smaller, newer, or thinly documented notes can require more. Required yield is a major driver of price, so a two-point change shifts an offer noticeably.
How is a non-performing note priced?
Buyers model expected recovery rather than a payment stream. Often that means estimating resale value, subtracting resale, legal, and holding costs, then applying a target return for the time involved. Buyers may also model a modification, reinstatement, or negotiated payoff. Senior liens and the enforceable debt cap recovery. Timelines vary by state and case, and resolution requires active management.
Does a lower interest rate lower my note's value?
Yes. Take a $50,000 note with 10 years left and a 12% buyer yield. At 6%, it prices near $38,700. At 8%, it prices near $42,300. At 10%, it prices near $46,100. The balance is identical, but the lower rate means smaller payments, so the buyer pays less.
Do I need a BPO or appraisal before I list my note?
You do not need one, but a recent value estimate helps. Buyers typically obtain or verify collateral valuations and title information on their own. Having your own comps and a clear lien position shows you know the collateral and can speed due diligence. For non-performing notes, property value is usually central to the price.
How much payment history should I build before selling?
Buyers differ. One buyer-side guide prefers six months of history on a re-performing note and treats three as the minimum. Another recommends at least 12 months of on-time payments before listing. Either way, a longer clean record usually earns a better price, so waiting can pay off if you are not under time pressure.
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Related resources from the Paperstac blog.
Sources & References
- Trust ETC. Fundamentals of Note Investing, Part 2 (June 2021). trustetc.com
- Fannie Mae. Fannie Mae Announces Winners of Its Twenty-Seventh Non-Performing Loan Sale (August 5, 2025). fanniemae.com
- Hartzog, Mike. Doing the Math on Mortgage Notes. BiggerPockets member blog. biggerpockets.com
- Gigwise. How Investors Value a Mortgage Note (page updated December 2025). gigwise.com
This article is for educational purposes only and does not constitute legal, tax, or financial advice. All worked examples use illustrative inputs and are not offers, quotes, or market data. Actual pricing varies by note, buyer, and market, and results are not guaranteed. Always perform your own due diligence and consult qualified professionals. © 2026 Paperstac.