When you’re buying a house, you must get financing from somewhere. So after you’ve held up your end of the bargain (doing all your homework and finding the perfect house), it’s time to convince someone else that you’re trustworthy enough to get a mortgage from the bank. How will you ever find a bargain house if banks keep turning you down? Read on to learn why Prescott mortgage companies sell your mortgage, the selling process, and what to do when the mortgage is sold.
Why Do Mortgage Companies Sell Your Mortgage?
The money generated by the sale is then used to pay off debt and make investments in other loans. These loans are long-term, spreading over 15 to 30 years, which frees a lot of capital. When you’re buying an asset (a house), you don’t want to hold onto it forever. You want to ensure that you have enough cash flow from that asset to use it to make more, pay off debts, or invest in other assets.
What Is the Mortgage Selling Process?
The first step in mortgage selling is getting pre-approval from your current lender. You’ll need to fill out an application and provide them with all the necessary information to make sure they approve your loan.
Once they’ve approved your loan and it’s been funded, they will send you a notice that says they are preparing paperwork for your loan sale. It is your chance to make sure everything is ready before they start processing any paperwork.
When the paperwork has been completed, it will go through a legal review before being sent to investors who will purchase it on their behalf. The investors will then send their offer back to the lender who made the original loan to consider making an offer on their behalf if there are multiple offers from different investors. One of them will be chosen based on various criteria, such as interest rate.
How to Find Out If Your Mortgage Is Sold
The new loan owner needs to notify you in writing within 30 days of the sale. The new loan owner will send you a letter stating that they have purchased your mortgage. The letter should include:
- New owners name
- Date of transfer
- Contact information of the new owner
- Name of the person who can resolve loan payment issues
- Evidence that there is ownership transfer
The lender should also notify you within 15 days in writing through email.
What to Do When Your Mortgage Is Sold
When a lender sells your mortgage, they will stop making payments. The amount of time this can take varies from lender to lender and depends on the terms of their agreement with you.
If you’ve been making payments regularly and meeting all of the requirements for your loan, it may take a few months for the new lender to take over. In some cases, it may take longer. In most cases, you will have to contact your old lender and ask them when they plan to stop receiving payments from you.
Also, check with the tax authority and insurance company to ensure they are aware of the change in ownership. If they aren’t, follow up with them and make sure they’re aware of it. Once everyone knows the sale and what it means for you, take some time to reflect on how this will affect your finances moving forward.
You might consider refinancing with another lender if you want more flexibility or a better rate. You’ll need to check with your mortgage servicer to see if they offer to refinance through them. If they do, then all the paperwork will be handled by that lender, who will send an application directly to you.
Will the Mortgage Change After Selling?
No. If you sell your loan, it will continue to be subject to the terms and conditions that were in place at the original loan time. Regarding escrow, the new servicer will have to find out if enough money is being collected monthly.
The new owner may increase the monthly payment if your property taxes, escrow, mortgage, and hazard insurance are insufficient.
What If You Experience a Legal Issue?
A mortgage company should protect its consumers during loan transfers if you run into a legal issue. Mortgage companies are required by law to notify you of this right when you agree with them. In addition, they must also give you information about your rights and responsibilities under the law in your state.
Reasons Why Investors Buy Mortgages?
The following are reasons why investors purchase mortgages:
- Investors buy mortgages to get a good rate of return on the money they put in. It can be done by investing in a company that provides mortgages or by investing in bonds that are backed by mortgages.
- Investors buy mortgages to ensure they receive income from their investments. If you want to make money, you need to ensure that your money is working for you, not against you—this means that you need to buy mortgages so that they are earning interest for you.
- Investors buy mortgages because it’s easy to diversify their portfolios and invest in different assets simultaneously (without selling any stocks or bonds). Investing in mortgage-backed security allows an investor to get exposure to real estate without putting up any cash upfront!
You’ll have little to no control over what happens to your mortgage. And as for who ends up being the buyers, there are so many that it’s impossible to tell. If your lender is doing a good job servicing your loan and they want to sell it, there’s a chance that they may offer you a competitive rate to entice you into staying with them. So even though our modern economy can be somewhat depressing at times, there is always flexibility on every level that we don’t often discuss. Contact NFM Lending at https://gregriordan.com/ for professional guidance on a home loan and answers to any relevant questions you may have.
Greg Riordan at NFM Lending,
325 W Gurley St Ste 102 Prescott Arizona 86301,