Tag Archives: home loan

What Happens if Your Mortgage Lender Sells Your Home Loan?

Mortgage Lender with Client

Mortgage Lender with ClientIf the day comes that you’ll get a letter from your mortgage lender, stating that your home loan has been sold to another lender, then do not be alarmed. You didn’t do anything wrong and you’re not in any kind of trouble. However, you must know some important things when dealing with a new mortgage lender.

Why Your Lender Might Sell Your Mortgage

After you’ve been approved for a home loan, it’s your lender’s responsibility to service it. Servicing involves:

  • the processing and collection of monthly mortgage payments
  • responding to all your mortgage-related queries
  • reporting your mortgage status
  • handling your escrow for paying your property insurance and taxes

The thing is, lenders have the right to sell mortgages and this is normal and pretty much common. If this happens to you, mortgage experts in Salt Lake City say that the buyer of your mortgage would take over your loan servicing. Lenders sell mortgages to make some money and raise more capital for new mortgages.

What Does the Law Say?

Under RESPA, or the Real Estate Settlement Procedures Act, your lender could sell your mortgage, but it would have to disclose the potential sale to you not more than three days after applying. You would get a document, which clearly states what your lender could do. Take note that your mortgage rate and term won’t change if your lender sells your mortgage.

This Act also states that your new mortgage lender can’t charge you overdue fees for the initial 60 days following servicing transfers. This would safeguard you from extra fees in case you mistakenly send your mortgage payments to your original lender following the cutoff date of your original lender.

You shouldn’t worry if your lender sells your home loan to another lender. All you need is to be aware of when and where you should send your monthly mortgage payments after the servicing transfer.

Do You Have to Get Pre-qualified for a Home Loan?

Miniature house on family's handsEvery homeowner who has gone through the process of home buying knows how important prequalifying for a mortgage is. The process of getting prequalified for a mortgage loan involves providing your mortgage lender relevant information, such as employment information, assets, income, and debts among others. From the information you provided, your lender could then estimate the loan amount that you could qualify for.

Are There Advantages to Being Prequalified?

When you prequalify for a mortgage loan, it would help you in narrowing down the many home loan options available to you and the many houses that you might be considering. Put simply, if you know how much you could spend, you could save effort and time looking for properties that you could actually afford.

Being prequalified for a home loan would also communicate to sellers that you’re a serious buyer. Likewise, sellers consider offers from individuals who are already prequalified as more serious. In addition, being prequalified could give you that edge you need when you’re in a bidding war against other homebuyers to buy an in-demand property.

What You Should Remember

Primary Residential Mortgage, Inc. and other mortgage brokers warn that regardless of the amount that your mortgage lender prequalified you for, you must stick to an amount that you could afford.

If your lender prequalified you for a loan that’s not within your budget, you could always speak with your lender and request for a smaller loan amount. Likewise, you are not in any way obligated to tell real estate agents the amount you’re prequalified for, so it’s fine to ask them to show properties within your price range.

Yes, it’s a great idea for you to get prequalification from your mortgage lender prior to even looking around for a home to buy. This way, you would know exactly how much money you could spend for a home, without having to go over your budget. In turn, your lender could explain the different loan options you could qualify for, one that’s appropriate for your specific requirements.

For the Right Reasons: When to Consider Borrowing

Home Loan

Home LoanWhile mostly considered as a negative financial strategy, you don’t have to rule out borrowing money completely. When you take in debt for the right reasons, you’ll be in a better place for the long term and avoid a negative impact on your finances.

Borrowing wisely can help you purchase things you immediately need, which could also build your wealth and add to your net worth. RapidLoans.com.au notes, however, that you need to know the interest cost and borrow only what you can afford.

New Home

If you want to buy a new house, you will need to get a mortgage. While buying a home isn’t right for everyone, it can be a good investment, especially if its value increases over time and you decide to sell it in the future. You will also need to borrow money to help you finance a commercial property or when opening a location for your business.

Car Purchase

You will also need to take out a loan or a lease to pay for a new car. Taking in debt for a new vehicle is mostly advisable if you will use it for business purposes. It is important to always weigh the cost of taking in credit against using your own savings. If you need to decide on a loan, compare rates from different lenders.

Business Start-up

The loan you need may depend on how much you need, how long you need it, and how you plan to pay it back. You can borrow money form lending companies, your bank, or even families and friends. It is important, however, to have a business strategy and solid plan to pay back your debt.

Education/Tuition

It is advisable to borrow money if you don’t have enough resources to finance an education. Whether you’re financing your own or your children’s education, you are investing in the future. This is because more education or getting a degree means you’ll earn more money when you get a job later.

Apart from these things, you can also borrow money to pay your debt for a much lower interest rate. Other right reasons include covering bills to avoid late payments, medical emergencies, and deposits on a new apartment.