Once you are done completing your loan application and all of your paperwork is approved and ready for closing you will be provided your mortgage note. This document is legal evidence that you as the borrower promise to repay the debt in full. In this document you will find the exact interest rate you will be paying, whether it is a fixed or adjustable rate loan, and the amount of time you are required to repay the debt. If in the event you fail to repay the loan, or fail to make your monthly payments on time, this document will explain all the penalties and procedures that will come from this event.
This document will clearly explain what type of mortgage the borrower has obtained. A Some of the most common types of home loans include fixed rate mortgages (FRM), adjustable rate mortgage (ARM), balloon payment mortgage, and interest-only loans. At the top of the note it should state exactly which type of loan it is.
Mortgages are sometimes sold from servicer to servicer so it is quite common for a borrowers mortgage to be sold at least once throughout the course of the loan. But generally this do not change the terms of the mortgage at all. The borrower just now has to make their monthly payments to a new bank. The only time this seems to become a problem is when the borrower is trying to work out an agreement with their lender such as a loan modification, repayment plan, short sale, etc. When this happens they will more than likely have to start the process completely over with the new servicer. The borrower should receive a notice in the mail prior to the transfer.
If you are looking to change the terms of your loan you must do this with either a refinance or a loan modification. People usually seek these options to secure a lower interest rate and/or monthly payment.
It is important that you keep all of your original loan documents on hand just in case you need to review them later down the line. If you are having a hard time locating these documents you can send a Qualified Written Request (QWR) to your servicer requesting all of your docs. Your lender will then have 20 days to respond to your requests.
My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.