Real Estate
May 26, 2020
link to facebook link to twitter
More Stories
Second mortgage and refinance How the new PPP loan may adversely affect your mortgage How to navigate appraisal during coronavirus pandemic How to plan the optimal time to buy a rental property How to avoid getting a jumbo loan due to Coronavirus A factor that can drive your mortgage cost up How child support and alimony can affect your ability to get a mortgage What to look for when getting a mortgage on a manufactured home Why getting a 30-year fixed-rate mortgage is a smart financial move How to lower your cash to close when buying a home What you need to know about securing a VA mortgage Mortgage payment relates to purchase price What to expect mortgage rates to change in the upcoming months Loan limits for 2020 make getting mortgage easier Three reasons to buy home at end of year Can you get a mortgage with bad credit? Income and all outstanding loans are key factors to obtain a mortgage Your income is a lifeline to finance a home Don’t be focused on credit when getting a mortgage Why your mortgage goals may not happen Don’t make the mistake of 401(k) home buying Fannie & Freddie change home mortgage appraisals COVID-19-How a mortgage forbearence works How to get a mortgage without providing tax returns The new way to get a mortgage with 1 year income tax returns Four common home buying mistakes to avoid How to create wealth with your income and finances Should you buy a house with monthly mortgage insurance? 2019 conforming loan limits rise FHA loan limits for 2019 increase No more VA limits in Jan. 2020 Should you cash out to refinance What makes the most sense? Three pricey loan scenarios to watch A surefire way of making loan process a hassle Changing income and job status may affect mortgage chances Six common mortgage loan scenarios How to lower your debt to income when getting a mortgage How to make your financial profile less intricate Paying off debt to buy a house can be challenging Buy a home now or should I wait? Negotiating the purchase price of a house With the virus, should you be buying a home now? How to get a mortgage if you have been furloughed due to COVID-19 Three reasons you should not buy a home Types of loans based on credit score How the FHA 100-mile rules your ability to rent or buy Three quirky issues that will hurt your mortgage Seven common mortgage mistakes The credit score it takes to get a mortgage What to expect in today’s loan process? How 1031 tax-deferred exchanges work Six to avoid when purchasing a home How to use rental income to qualify for a mortgage Mortgage inquiry makes your credit score drop? Why waiting for mortgage rates to get better is a losing proposition Transfer property to family and be protected under Prop 13 FHA requirement might hurt buying chances Purchase price should not be most important factor Finances matter when buying a home Could the 30-year fixed mortgage get to 3 percent? Mortgage rate sounds too good to be true How the mortgage process gets ugly if you have a difficult picture Should you go FHA or conventional for purchasing your first home? Two mortgage process problems you will want to avoid Home value when refinancing What you need to know about the mortgage 4506-t document Don’t make mistakes when getting a mortgage refinance A non-traditional program for self-employed mortgage borrowers Should you buy and build or buy a single family home? How expensive your mortgage will be due to bad credit? The loan process and what not to do Should you refinance with today’s mortgage rates? Be careful getting a mortgage if you have a bankruptcy Cash-out refinance or home equity Lender knows how to purchase business? Read the fine print Cash to payment formula when buying a home A bank statement program might help get a mortgage Pulling credit may not make sense Why the VA mortgage is the best home loan Can you use roommate income to get a mortgage? Best benefit for your first-time home buyer A loan program you may be eligible for based on your credit score Be wary about paying off this type of mortgage Common questions on financed mortgaged insurance loans Things that affect your first-time buyer mortgage options Self-employed income The #1 mistake consumers make when getting a mortgage… How much are closing costs when you purchase a house? Two mortgage loan programs get a better interest rate How much of your mortgage income should be going towards an auto loan? Five quirky refinance scenarios that work Working two jobs makes now easier to get a mortgage How mortgage lender credits work

Why your mortgage payment keeps changing

By: Scott Sheldon
August 10, 2018

Why does your mortgage payment keep changing? Consumers are often given little explanation by their bank on why their payments are due to a different company. When you take out a mortgage here’s what you need to know…

The residential mortgage business in America has two sides; loan origination and loan servicing. Banks make money through the originating of loans i.e. loan creation as well as servicing of loans (collecting of the monthly mortgage payment). Both are extremely profitable.

 Competitive interest rates, great service and transparency are what the consumer is after. The mortgage company is interested in making a return on that loan they originate as they are paid both on the origination side and on the servicing side. Both consumer and bank have different objectives in mind when it comes time to approve a loan and lend money for a purchase or for a refinance.

Here is how this affects consumers… the classic example is a homeowner who has a mortgage. The consumer makes the mortgage payment on time; however, the servicer of that mortgage changes or has changed multiple times since they took out that mortgage. Here’s why, to generate cash, banks will sell off a servicing portfolio. Different banks have different amounts of servicing portfolios and a portfolio (assets) that’s producing income is very attractive for a bank looking to increase their bottom line. So, when your mortgage company notifies you that your loan has been sold to another mortgage company, it’s because the previous company that sold your mortgage sold your loan to generate cash, most likely to turn around and originate more mortgages.

As a consumer this is something to be aware of because having to change where you’re making your mortgage payment, even a handful of times, can be inconvenient. Consumer protection laws protect consumers by requiring the old lender to forward the payment to the new mortgage loan servicer.

When taking out a mortgage to purchase or refinance it is advisable to consider working with a mortgage company that both originates and services their loans.

By working with a mortgage company that incorporates both into the package your process is streamlined while making your payment experience after-the-fact more manageable. When you’re buying a home it’s all about closing on the mortgage; however, what often can go by the wayside is what transpires after you close on the mortgage and that should not be something discounted in a prudent decision to select a mortgage company for your financial needs.


Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at