Payment coupon books for owner financed notes
A payment coupon book is a set of slips, one per payment, that your buyer tears off and mails with each check. It tells them what is due and when, and it tells you which payment each check is for. For a seller-financed note paid by check, it is the simplest way to cut down on wrong amounts and "which month was this for?"
What each coupon should show
Each coupon has two parts, separated by a cut line.
| Part | What goes on it |
|---|---|
| The slip the buyer mails | The buyer's name and the property, the due date, the amount due, who to make the check payable to, where to mail it, and blank lines for the amount enclosed, the check number and the date. |
| The stub the buyer keeps | The payment number, the due date and the amount, with lines to write down the date paid, the check number and the amount, so the buyer has their own record. |
| The late fee, if the note has one | The fee that applies after the grace period, so it is never a surprise. |
Getting the amounts right
A coupon book printed from the original amortization schedule is right only as long as nothing changes. On a real note, several things change the amount due:
- Escrow. If the buyer pays toward property taxes and insurance, each coupon asks for principal and interest plus the monthly escrow amount. When the escrow amount changes, reprint. See escrow for owner financing.
- Rate or payment changes. An adjustable rate, a modification, or a payment you agreed to change from a certain date all change the coupons after that date.
- Extra payments. Extra principal shortens the note, so the last coupon comes sooner and asks for less.
- A balloon. The last coupon on a note with a balloon is not a regular payment. It should tell the buyer to ask for a payoff figure first, because the exact amount depends on the day it is paid. See the balloon payment calculator.
How many to print
A year at a time is the usual choice. Twelve coupons are easy to mail, and printing a fresh book each year picks up any change in escrow, rate or payment. Print a new book sooner after any change to the amount due, and ask the buyer to throw the old one away.
A coupon book is not the record
The coupon tells the buyer what to pay. What they actually paid, on what day, and how it was applied to interest and principal still belongs in the note's payment ledger. That ledger is what a title company, a refinancing lender or a note buyer will ask for. See the payment ledger template and what a certified payment history is.
Making coupon books in OwnerNote
OwnerNote prints a coupon book from the note itself. Choose the first coupon and how many you want, and it makes a letter-size PDF with three coupons to a page, each with a slip and a stub. Every amount comes from the note's schedule: rate and payment changes from their dates, the monthly escrow, a partly paid installment asking only for what is still owed, and a final coupon that tells the buyer to ask for a payoff figure. If the note has a late fee, each coupon shows it. Nothing is stored, so you can print a fresh book whenever the terms change.
The same record sends your buyer reminder emails before each due date and a receipt for each payment you record, if you turn them on.