Closing on a home only to find out your mortgage has been sold to another lender can be alarming yet is very routine in the mortgage industry. While it does not affect the terms of the loan, it is still best to prepare yourself for this common practice. There is a clause in most mortgage contracts that states the lender has the right to sell your mortgage to another service company. It is reported that around seven of 10 mortgage loans change hands. Here’s what to expect when your mortgage is sold.
Notification of the Change
While it’s entirely legal and fairly common for lenders to sell mortgages, they are required to provide you notice. Both the previous lender and the new company that will be handling your loan must notify you of the change at least 15 days prior. The new lender must also provide contact details within 30 days after the transfer is complete, so you know where to send payment and how to get in touch.
The Details Will Stay the Same
ARMs or adjustable rate mortgages will go through changes but the details of your loan will not change when it changes hands. Your rate and the amount you owe will stay the same. The biggest difference when your loan is sold is not the way the mortgage functions but rather the name of the company you write on your check.
The Loan Modification Process may be Affected
If you are in the process of working with your lender to modify your loan, having your mortgage sold may impact this. Modification is often carried out to make it easier to pay your bills. But if your loan is sold be aware that you may have to restart this process.
Confirmation of Payment Information
While we mentioned your new lender must provide contact information and an address to which to send your check, so much is done digitally nowadays that there are other factors that will go into ensuring continued payments. If you are having payments automatically withdrawn from your account, make sure that will transfer over and that additional paperwork is not needed. A good practice is to contact your new lender a couple of weeks after your first payment to ensure they’ve received it.
Your Mortgage Might be Sold
Lastly, this practice is so common that you should enter the lending process with the expectation of your loan switching hands post-close. When your lender sells your mortgage, it frees them up to make additional loans to homebuyers just like you, continuing the dream of homeownership. Don’t panic if your mortgage is sold! A post-close change in lenders is commonplace and harmless as long as you are prepared. Remember with any lending change to review all documentation carefully to make sure you don’t miss anything. Once you’ve completed the home loan process with Eagle Home Mortgage, rest assured that no matter what institution you send your mortgage checks to, we’ll have your back throughout your journey of homeownership. Eagle can do yearly checkups to make sure homeownership is going smoothly and will be there for the long run if you have any questions or should you need assistance.