You obtain a mortgage loan, buy your home and settle in.
But then your loan is sold.
Do you know how that affects you? Well, it really doesn’t.
Let me explain…
For many people, buying a home is one of the most exciting times in their lives – but it can also be one of the most confusing times. The endless amount of paper works, credit checks, inspections, assessments – the list goes on and on.
Fortunately, if you are dealing with an experienced realtor like myself, I am able to streamline this process as best as possible to eliminate the amount of stress and confusion. One of those stresses can be obtaining a mortgage.
Among the endless amount of documents you sign to first apply for a loan was a Mortgage Servicing Disclosure. This document informs you what percentage of the lender’s loans are sold. More often than not, the majority of loans approved and funded will be sold down the road at one point or another. However, it’s important for you to know that this does not change the terms of your individual loan.
Let me be clear – your loan payment and interest rate will not – and more importantly, can not – be impacted if and when it is sold.
So why do lenders sell their loans after going through the efforts of originating, approving and funding it just to lose the interest a new loan provides? Simple – lenders need to sell so they do not run out of money to lend.
Mortgage companies work on a line of credit – they tap into this credit line when it’s time to fund your loan. In order to replenish the line of credit, the lender sells the loan to a third party. Now the lender has more funds to make more loans.
Most loans are sold to other mortgage companies, but ultimately they are sold to either Freddie Mac or Fannie Mac. This marketplace is known as the secondary market for mortgages. It is robust and active and keeps the mortgage market liquid. If not for this secondary market, there would be fewer loans issued and even fewer choices.
So have no fear – the reason your loan was sold is so that the lender can continue to service other home buyers like yourself. It’s nothing personal. However, if you’re still confused about this process and have questions, I’m here to answer them for you – just give me a call and I’m happy to explain it all to you.