You've just moved into your new home. You've unpacked, and you're starting to settle in when you receive a letter informing you that your mortgage has been sold and is being serviced by a new institution. Is this allowed? Have the terms of your mortgage changed? Why would your lender sell your mortgage?
Among the many documents, you signed when you first applied for a loan was a Mortgage Servicing Disclosure. This document tells you what percentage of the lender’s loans are sold. More often than not, the majority of loans approved and funded by a particular mortgage company will be sold to someone else. It's important to note that just because your mortgage has been sold, this does not change the terms of your loan. Your loan payment and interest rate will not, and cannot, be impacted.
You’re probably wondering, “Why to go through all the effort of originating, approving, and funding a loan just to forgo all the interest that new loan provides?” The answer is surprisingly simple. If not for selling the loan, the lender would soon run out of money to lend.
Mortgage companies today work with a line of credit. It’s not as if the mortgage company approves a loan then opens up a vault full of money to fund your mortgage. When it’s time to fund your loan, the lender taps into the line of credit for the necessary amount. In order to replenish this line of credit, the lender sells the loan to a third party. Once the loan is sold, the lender now has more funds to make more loans. Who is the loan sold to? Many times it’s sold to other mortgage companies, but ultimately the loan is sold either to Fannie Mae or Freddie Mac.
The marketplace for all this loan buying and selling is called the secondary market for mortgages. This secondary market is robust and active and keeps the mortgage market liquid. Without a secondary market, there would be fewer loans issued and still fewer choices. When your loan is sold it’s not because your original lender doesn’t appreciate your business, it’s so they can continue to service other home buyers and make more loans.
Author:Keith Judish Phone: 623-224-7956 Dated: May 10th 2019 Views: 297 About Keith: O'Keith Judish licensed REALTOR® with Realty ONE Group serving the West Valley and Phoenix Metrople...
View our latest blog posts in your RSS reader. Click here to access.
O'Keith Judish licensed REALTOR® with Realty ONE Group serving the West Valley and Phoenix Metroplex.
We use advanced search technology for our buyers in which allows them to be alerted immediately when a home hits the market. These tools help the sellers sell their home faster and buyers get the home of their Dreams in this competitive market.
O'Keith began his real estate career in 2009 using web marketing as his direct source for customer relations. As the internet has taken off, so has real estate. Today 95% of all customers begin their home search using the internet. Having someone like O'Keith with his knowledge of technology is helpful to a client, both locally and abroad, in finding a home in the Phoenix area.
He has provided online video tours to his clients that are out of state and in other countries, which made their home buying purchase a breeze. We use the latest technology that is consistently being updated by the MLS for the latest listings, so the client will never miss out!
If you are looking to purchase a home in the Greater Phoenix Real Estate market please contact us to get the process started today.
This formula is only a guide and not to be construed as actual lending
"“A Cut above the Rest, With the Canadian Dollar and U.S. housing affordability at historic highs, we knew the time had come to make a strategic investment in U.S. Real Estate market. After extensive research we decided to invest in the Greater Phoenix area and now required a competent and trust worthy realtor who would be willing and able to handle all aspects of this investment. This would encompass finding the right property and getting it ready for the rental market. We came across Keith Judish’s website and were impressed with some of the services he provides. Keith, who works the entire Phoenix area, will visit a prospective home and take an extensive up-close video of it and its immediate neighourhood. Commenting all-the-while on lay-out, features, possible defects and overall condition of the home. He will then promptly forward this information via internet to his client(s). This invaluable tool enabled us to “see” the home without actually being there. Once we met Keith"
Alan and Petra Semeniuk Maple Ridge, B.C., Client — April 15, 2013