As long as I’ve owned a home, I’ve had a mortgage. The mortgage I generally have had is usually through whatever lender came through at the time of my home purchase, but isn’t necessarily one of my choosing – it hasn’t mattered much on the company though, because as long as the mortgage rate was what I agreed to, it didn’t matter to me. Within a year or so of buying the home and establishing the mortgage, it always seems that the initial lender “sells” off the mortgage to another institution or bank. When/if that happens, the new company assumes the same terms and my mortgage remains unchanged. Same thing when I have refinance the home – the refinance company comes in with a better rate (used to, at least) and within a short time frame, sells the mortgage off to another company. To make things even stranger, this has happened to me even with an established mortgage of several years with the same company/bank. I can’t fathom why/any benefit the banks get from doing this.
TL;DR: why do banks sell/transfer mortgages around if there is no change to your term? How does it benefit them?
In: 293
So here’s how a mortgage works. You decide you want a house. Let’s say the house costs 100k. You don’t have 100k, so you go to a mortgage company. The mortgage company does have 100k, so they buy the house for you, handing the owner 100k. Now they no longer have 100k, but you’re going to end up paying them 300k for the house over the next 30 years. Hurrah, you have a house, and they end up with a 200k profit. Now someone else comes along, and wants to buy a 200k house. The mortgage company needs 200k to buy the house, but only has 100k. So they sell your mortgage to another company for 120k, because they can show you have been making on time payments for the last two years. Now they have 220k, and can buy the house for the second guy, who they’re going to make 400k off of in the same time that they were going to make 200k off you.
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