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Old 05-28-2013, 10:49 AM
 
57 posts, read 146,881 times
Reputation: 26

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My husband and I have found a home we are interested in purchasing. We had previously gotten a preapproval letter from my bank (now our bank) and are wondering if we should go with them for the mortgage as well. It is a local bank and they seem to have good rates/closing costs and they have a program where they would waive PMI as long as we have 10% down, which is very attractive to us, as we live in a higher cost of living area. However, I have also heard they tend to sell mortgages. Is this a big deal, if you would keep the same rates and terms as the original loan and it is just being serviced by a new company? We are looking around at a few other local banks (one other we are also a member at and another we are not but a few people have recommended). We are just not sure if we should just be looking at the overall rate/terms and that's all that should matter when we choose a mortgage lender or if we should be looking at certain banks as better than others? Any advice would be appreciated!
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Old 05-28-2013, 12:20 PM
 
3,803 posts, read 9,330,468 times
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Most banks sell their closed loans. Big, big banks, and smaller credit unions, and some portfolio lenders retain and service them.

But your terms will not change. You will just re-forward your homeowner's insurance info to them, and change your payment structure if you auto-pay.

I wouldn't pick a bank solely on whether they retain the paper. You seem comfortable and happy with your present situation.
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Old 05-28-2013, 09:41 PM
 
Location: Santa Rosa
486 posts, read 833,052 times
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The bank can sell a mortgage at any time. The chance that one bank might be more likely to sell the note or not should be a no-issue.
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Old 05-28-2013, 10:46 PM
 
57 posts, read 146,881 times
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Great, thanks for the input! I agree it would seem silly to take a bank with a higher rate just because they don't have a reputation as a place that would sell a mortgage.
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Old 05-29-2013, 07:35 PM
 
Location: Mid-Atlantic
12,526 posts, read 17,564,509 times
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My 2 cents. Took out a loan almost 20 years ago with a local broker who was a friend of mine. She packaged the loan to some bank in Florida, not a problem at first. But then they keep hitting me with so called late fees stating that my check did not arrive on time. It got to the point where I Fed-Exed my payment every month so I had a record. And when I paid an appraisal fee to drop the PMI, they said it wouldn't take effect for 6 months. SO, when I refinanced I told my broker, place it with a local bank that doesn't sell. She did, it has worked out great. Regional bank, people know me, can drop it off if need be, but mainly use on-line. And when we went to purchase a vacation home, we went directly to them and had very little paper work. Moved my business and personal checking accounts there as well.

I hate to see these small-regional banks being swallowed up by the Big Boys.

Last edited by Copanut; 05-29-2013 at 07:36 PM.. Reason: pour spilling
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Old 05-30-2013, 01:04 PM
 
Location: New York
2,251 posts, read 4,919,415 times
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Carrie'

I do not know your loan details - here's a little mortgage 101...Loan servicing

Having your home loan sold is a very common, here is a link that explains more. Loan servicing - Wikipedia, the free encyclopedia

stepping up to mortgage 102.... Mortgage Backed Securities

Most mortgages originated by primary lenders are sold in the secondary mortgage. The loans are pooled together with other similar mortgages and converted into mortgage backed securities and bonds. These mortgage backed securities become part of the larger capital markets which also includes government securities, corporate bonds and municipal bonds.
  • An example a $300,000 loan at 30 yrs @ 4.5% = $1521.20 monthly payment. $1521.20 x 30 years = $547,632.00

    The originating lender sells your loan at 90% for future $547,632 x 90% = $492,868
    Then your loan gets sold again $492,868 x 85% = $419,938
    Then again $492,868 x 60% = $251920....

When I first learned this it was mindbogglingly how much money is made in America off mortgages. Loan servicing is were banks make big money. Over the life of your loan you will pay 2 to 5 times more in interest than what you paid initially. Banks are selling the loan for profit to the next servicing lender. change multiple times.

Honestly this is something you have no control of. Your payment details same the same, only the payment address changes. Be advised between different servicing lenders, the amount held of future payments of escrows (taxes and ho insurance) may change, causing a change in the actual payment.

In closing the best thing you can do is send extra into your mortgage. One payment divided by 12, adding the 1/12th with the normal monthly payment on a 30 year loan, reduces the term to 23.5 years.

My wife and I paid off our 30 year loan off in 13 years, initially we did a bi-monthly payment, then refinancing to a shorter term. We sent in our tax returns, getting to the point doubling and tripling our payments each month. Now without a mortgage payment we can afford other things.

Good luck on your new home....
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