What Does It Mean When Your Mortgage Is Sold?
After carefully choosing the best mortgage lender for your needs, you will receive a letter informing you that your mortgage has been sold to an investor.
What happens now that your loan is in someone else’s hands? Does it affect your payments?
Rest assured, this is a completely normal part of the mortgage process.
Who Sells Mortgage Loans?
You will receive a letter stating that your mortgage loan was purchased by an investor.
But who sold it, and why? The short answer: it’s usually the bank or lender you worked with.
The reason your lender sold your loan comes down to something called liquidity. When your lender issues your mortgage, they’re tying up a significant amount of money, especially with long-term, 30-year mortgages. By selling your mortgage to an investor, they free up that money and can continue to offer loans to new homebuyers.
The investor who purchases your loan may be one of three government-backed agencies: Fannie Mae, Freddie Mac, or Ginnie Mae. In some cases, private investors, such as a bank, might purchase your mortgage as well.
Key Players in the Mortgage Process
To understand what happens when your mortgage is sold, it helps to recognize the different entities involved in the process.
- Lender: This is the institution that provided you with the money to purchase your home. Lenders are often the first step in the process, as you work with them to find a loan that fits your financial situation.
- Servicer: The servicer is the entity that manages your mortgage after you’ve closed on your home. They’re the ones you send your monthly payments to, and they also handle things like escrow for taxes and insurance.
- Investor: The investor is the one who actually buys the mortgage from the lender. Investors can include Fannie Mae, Freddie Mac, and Ginnie Mae, which buy loans and are backed by the government. Private investors can also purchase mortgages.
What Happens When Your Mortgage Is Sold?
When your mortgage is sold, the main thing that changes is the company handling the servicing of your loan. The servicer is the one you interact with most often, and they’ll be the ones receiving your monthly payments, managing your escrow, and communicating with you about your mortgage.
The good news is that your loan terms, including your interest rate, won’t change just because your mortgage has been sold. The only thing that will change is the company to which you send your payments.
What You Can Expect
Before the sale happens, you’ll receive a notice informing you of the change. Federal law requires that you be notified at least 15 days before the switch, and within 30 days, the new mortgage owner must provide you with their name, address, and contact information.
It's a good idea to keep this information handy so you know exactly who to contact if you have questions or concerns. The transition itself is usually seamless, and you should not experience any disruption in service.
Closing Thoughts
A mortgage sale might feel like a big change, but rest assured, it’s a routine part of the process. It allows lenders to keep offering loans to future homeowners while investors help manage the mortgage market. The only real difference for you is the company you send your payments to, but that’s an easy adjustment with the right information.
So, if you’ve received a letter about your mortgage being sold, there’s no need to stress! Your mortgage terms will remain the same, and your new servicer will provide all the necessary details to keep things running smoothly.