You might be shocked to learn as a homeowner that your mortgage can be sold, and possibly more than once. Mortgages are frequently sold on the secondary market, but for some borrowers, this might be unsettling. The sale of your mortgage does not necessarily indicate cause for alarm, though.
When your mortgage is sold, the organization or person who provided the initial loan has given another business the authority to collect payments from you. This is frequently done for a number of reasons, including the lender’s need to release cash to lend to additional borrowers or their desire to lower total risk exposure.
So, is selling your mortgage a bad thing? Simple no is the response. Your rights and obligations as a borrower are unaffected by the transaction, and the terms of your loan, such as the interest rate, payment plan, and loan period, are not subject to modification. Simply put, you’ll be paying a new servicer.
It’s crucial to keep in mind that the new servicer must give you contact information for the new business and notify you of the transfer within 30 days of the transaction. Additionally, your initial lender must to send you a letter informing you that the mortgage has been sold.
Let’s now discuss another frequently asked topic about mortgages: Does a mortgage mean death? Simple no is the response. Although the word “mortgage” may conjure up macabre images—it derives from the French word “mort” and means “dead”—it simply alludes to the fact that the loan is backed by your property. In other words, the lender has the authority to foreclose on your home and seize it if you default on your mortgage payments.
Now let’s move on to a related query: why is it referred to as a mortgage? As was already mentioned, the word is French in origin. In the Middle Ages, when few people could read or write, land was frequently pledged as security for debts. The borrower would continue to have access to the land while it was being held by the lender until the loan was repaid. Because it literally translates to “dead pledge” in French, the word “mortgage” was employed to characterize this arrangement.
Let’s finally discuss whether or not you ought to hire a mortgage broker. Working through a broker undoubtedly has advantages, such as access to more lenders and perhaps better rates, but there may also be disadvantages. Brokers frequently get paid on commission, which might create conflicts of interest and cause them to direct you toward particular lenders or loan packages. Working with a broker can also make the mortgage process more complicated, which may not be necessary if you feel confident conducting your own research and negotiating with lenders.
In conclusion, the sale of your mortgage need not be a source of worry, and the word “mortgage” need not be interpreted as a synonym for demise. Although employing a mortgage broker has both advantages and disadvantages, the choice of whether or not to do so ultimately rests with you. Do your homework to make sure you’re receiving the best price available if you do decide to engage with a broker.