Monthly Archives: November 2012
The following is a guest post (but not a sponsored post!) from Tali Wee of Zillow.com. I was invited to visit Zillow headquarters in Seattle in September and I think they are an awesome company that researches one of my favorite topics: real estate. I’m excited to share good information on understanding real estate and mortgages with my readers!
New homeowners often become shocked when they find out their lender sold their loan to an investor they’ve never heard of, just weeks after they purchased their home. Throughout the process of buying a home, a lender and borrower work closely for weeks. They build a trusting relationship by meeting to review financial options and sending documents back and forth in a frenzy. It may seem disrespectful to be informed via snail-mail that the close relationship with your lender is ending, and your loan has been sold.
Rest assured, the letter is not junk mail, and the action is not fraudulent or a reflection of how the lender views the homeowner personally. It’s highly common and nothing to worry about! Before panicking, remember all of the paperwork is signed. The terms of the loan have been agreed upon and cannot change even though a new lender will be collecting the payment.
What Should The Homeowner Know?
When a loan is sold, the homeowner should receive a letter from their current lender stating the loan has been sold to another lender or investor. The homeowner will also receive a letter from the new lender/investor stating it will now be servicing the loan. The letter will include an address to send the monthly payments. The terms of the loan and provisions for delinquencies agreed upon with your originating lender will still apply with the new lender/investor.
What Changes for The Homeowner?
Homeowners will have to use the payment options provided by the new lender. Some lenders will accept online payments, automatic payments or checks by mail. Homeowners will be subject to any fees involved with the new payment options. Review the letter from the new lender; it may instruct the homeowner to notify his/her insurance carrier of the loan transfer. If the loan was originated through a bank where the homeowner was promised benefits, such as free checks, those conditions may no longer apply. Call the originating lender with any questions.
Why Does the Lender Sell The Loan?
Lenders sell loans for two reasons: to make money, and to free up their capital to offer more loans. They earn money through loan origination fees and from interest off monthly mortgage payments. However, creating and selling loans is more lucrative for a lender than holding and servicing loans. The fewer loans a lender is holding, the more money the lender has to loan to new borrowers, increasing earnings of origination fees.
Mortgage brokers sell loans on the secondary mortgage market to earn a commission. The secondary mortgage market consists of loan originators, mortgage aggregators and investors. The loan originators sell loans to borrowers. The aggregators buy individual loans from originators, bundle them into mortgage-backed securities and sell them at a premium to investors.
Does It Matter Who Owns The Loan?
Homeowners’ loans may be at any stage of the above process at any time. Homeowners will be informed by letter as the servicer of their loan transitions from lender to investor. The only thing a homeowner needs to know is where to send the monthly mortgage payment; the rest doesn’t affect the loan. If you borrowed money under signed terms, despite the servicing lender, those terms will remain the same.
News For Future Homeowners
If you are a prospective home buyer considering taking out a loan, don’t worry about the reputation or stability of the originating lender. Go for the best rate. These days, potential buyers can begin their lender search online on Zillow Mortgage Marketplace. You’ll likely work closely with your lender throughout the buying process, but your lender is not your adviser. That working relationship may dissolve just weeks after signing your documents when the loan is sold.
Despite most people’s efforts and all the time they have spent in trying to get out of debt, they are never really successful. Although their efforts are admirable, the one thing that most people lack is a wealthy mindset. It is a basic necessity; a requirement if you want financial freedom. Here is a closer look at why a wealthy mindset is the basic rule for financial freedom.
You CAN make money
In this day and age, earning money has become so difficult that many people fall victim to depression and an unhealthy mindset. Many people have come to the conclusion that it is almost impossible to make money. As a result, they stop trying to make money.
The one thing that the wealthy know very well is that anyone can make money. If you have skills, time and/or the right resources, you are all set to make money. As such, if you want financial freedom, you have to get into this wealthy mindset. You have to believe that you can easily make money.
Believe that all Debt can easily be repaid
A good majority of people are in so much debt that they now believe that it is almost impossible to get out of it. The problem is that they stopped believing it was possible. The truth is that any debt can be repaid if you are willing to pay it off and the wealthy know this. The wealthy know that with the passage of time, all debt can be repaid. You should to get into this mindset too.
The Wealthy have the Right Information
One reason why people believe that debt cannot be repaid is because they do not have the information they need. Everyone knows that you have to make timely payments but nothing else. If you don’t know about the various ways to overcome your debt, you will never be able to do so. A wealthy mindset however, is one where you have a desire for all the right information.
The wealthy use such information to overcome their debt rather easily. When they have details about how exactly to get out of debt, they have the ultimate financial freedom. Get the information you need to find your debt to income. Use this debt to income ratio calculator. Without the right information, you will never know how to overcome your debt and gain financial freedom.
Be Realistic yet Positive
Many people are led to believe that you can gain financial freedom overnight. However, the truth is that gaining financial freedom is not usually something that happens overnight nor is it something that you have to put in minimal effort for. A wealthy mindset states that a lot of hard work and patience is required in order to gain financial freedom. However, they know that they will gain it.
The wealthy realize that gaining financial freedom is something that takes a while. It does depend though on both you and the information you have. For example, you can get the information you need to find your debt to income.
Use the best debt to income ratio calculator. By doing so, you can gain financial freedom quicker; not instantly.
Set your Priorities and your Goals
Most people try to earn money from many different sources, just doing whatever they can to make extra money to gain financial freedom; doing so without a plan. The wealthy however, know exactly what to do in order to gain financial freedom. They set their priorities straight. By doing so, they are able to gain more money with less effort.
It is crucial that you adopt this wealthy mindset and start setting your goals. When you know what you want and how you want to acquire it, doing so becomes much easier.
You have to believe that you can make money just like the wealthy. You need to realize that you can pay off your debts easily. You need to do get the right information, just like the wealthy do. You have to think realistically but positively.
In short, if you want financial freedom, you have to adopt a wealthy mindset; it is a basic rule. Without it, you may never gain financial freedom.
I spent a day checking out the construction projects at the Port of Long Beach, the second-busiest port in the US (after the Port of Los Angeles which is right next door). Watching the containers loading and unloading and the hearing about the future of the port, including its sustainability mission and significant widening to accommodate the world’s largest container ships got me thinking about how crippled we would be without international trade markets.
Why does trade benefit the US? Think of trade as something that is exchanged between partners. The US has partners across the globe and increasingly, our trade with Asian countries is growing, both in volume and dollar amounts. There are political implications to this, but for the most part, a booming trade between countries leads to business, education and exchange opportunities between partners, and the US and its partners are no exception. When a business is growing, it is easier for companies to obtain international trade financing to grow their operations quickly and fund new investments. Without being limited by a slowdown in available liquid capital, many companies have seen the benefits of expanding domestic companies to international operations.
I got to see a personal example of this recently as a friend of mine has begun to ship a high-end soap brand to several Asian and European countries. In the US, we often equate European products with high quality, but American brands are also seen as high quality in other countries, especially China. Thanks to this, he expects his international sales to grow to over 40% of his business in 2013 alone. With manufacturers returning to the US, and breathing new life back into American-made goods, international trade will continue to grow. As an individual consumer, you can take advantage of the opportunities that the open market provides by checking out sites like Alibaba for products ranging from jeans to kitchen appliances. You might even decide to dabble in trade yourself by buying items in bulk and reselling them in a retail store.
Back at the Port of Long Beach, I watched as the marine construction contractor performed its work from a barge. They’ll be expanding the terminal to accommodate the ultra-large container ships which can carry even more containers and increase trade to the region. It’s exciting to be in the middle of the action, but it’s even more exciting to think about what faster, more efficient trade means for the US.