Believe it or not but your house is more than just a structure with your family living in it. When your house is tied to a home loan, it essentially becomes a financial instrument. And when you think of it this way, it becomes clear why your home loan will often get resold to another lender, during the life the loan.
If you're a new homeowner or a homebuyer, it can be a surprising and scary thing to learn that your home loan has been sold to another lender. What does this mean? Do you still have the same terms? Will your monthly payment change? Will it affect my credit? And how does this affect my homeowners insurance?
Luckily, there is nothing to worry about.
If your home loan is sold to another lender, it has nothing to do with you or the quality of your loan. Typically the details will remain unchanged, including the original terms and conditions, interest rate, loan duration and payment schedule. So is there anything you need to check on if your home loan is sold to another lender?
The answer is “yes.”
You home loan and your homeowners insurance
When you purchase a home loan, your lender will require you to purchase homeowners insurance. If you have a mortgage escrow account, your insurance payments will be lumped with your loan payments.
If your loan is sold to another lender, call your new servicer to ensure they have all your correct information on file. It’s important to make sure your beneficiary is listed correctly and to double-check whether or not your insurance is sufficient with your new lender.
Some mortgage companies offer to escrow life or disability insurance to pay off your mortgage in case of a death or make payments in case of a disability. Your old servicer should inform you what effect the transfer of servicing will have on this insurance coverage. If they don’t, ask them so you are clearly understand whether the changes that have been made still provide you with sufficient insurance coverage, or if you need to alter your policies in any way.
Call your service provider or insurance agent
There is no reason to be alarmed if your home loan is transferred from one lender or another--typically these transfers happen without a hitch in the process. However, always check in with your service provider or insurance agent if you have any questions. (844-837-2869)