My mortgage loan was sold to some rando company

[peenie 1,812]

WTF? Help me understand this...

I got a 30-yr fixed mortgage and I've been paying it for over a year and now it's been sold to another company. The thing is, most of my payments have gone toward the interest, not the principal. Am I being ripped off? Meaning, if they keep selling my mortgage year after year, I'll never get to pay the principal portion because they keep making it a 30-yr loan all over again!!!! I've paid about 25K into the house already, but the loan amount has only gone down 5K!!!!! How is this legal????

[HellToupee 1,252]

do you have google where you live

 

this happens all the time 

[Strike 4,800]

The time frame of the loan doesn't change because they sold it.  As far as the principal vs interest goes that's normal.  As time goes on that will slowly reverse.  Towards the end of the loan you will be paying almost all principal and very little interest.

[HotRod 35]

Typical.  Mortgages get sold all the time but nothing changes.  It doesn't go back to day 1, everything stays the same.

And yeah the first few years are pretty much all interest.  That's how amortization works.

[peenie 1,812]

I know they sell loans all the time, but how does that affect my interest and principal? Does anyone know? 

[peenie 1,812]

1 minute ago, HotRod said:

 That's how amortization works.

I will look that up on Google since some people are so high and mighty and genius. 

[HotRod 35]

Just now, peenie said:

I know they sell loans all the time, but how does that affect my interest and principal? Does anyone know? 

It doesn't.  There is no effect.

[Strike 4,800]

Just now, peenie said:

I know they sell loans all the time, but how does that affect my interest and principal? Does anyone know? 

Nothing changes other than who you send your payment to. 

[shadrap 164]

4 minutes ago, peenie said:

WTF? Help me understand this...

I got a 30-yr fixed mortgage and I've been paying it for over a year and now it's been sold to another company. The thing is, most of my payments have gone toward the interest, not the principal. Am I being ripped off? Meaning, if they keep selling my mortgage year after year, I'll never get to pay the principal portion because they keep making it a 30-yr loan all over again!!!! I've paid about 25K into the house already, but the loan amount has only gone down 5K!!!!! How is this legal????

you are not getting ripped off.  Your original mortgage obligation should still be the same, you are just making payments to a different company.  I'm thinking the loan is structured so the early years are mostly interest payment.  Most 30 yr. mortgages are like this.

[nobody 2,461]

3 minutes ago, peenie said:

I know they sell loans all the time, but how does that affect my interest and principal? Does anyone know? 

It doesn't.  You signed a contract.  Selling the right to your debt doesn't change the terms of your contract.

But I understand why that would be unsettling.

[peenie 1,812]

Loan Amortization

Amortization refers to the process of repaying a loan in full by the maturity date by making monthly payments of the principal and interest over time. Early in the loan's life, a more significant portion of the flat monthly payment goes toward interest, but with each subsequent payment, a larger part of it goes toward the loan's principal.

[Alias Detective 1,312]

Loans to black people get sold a higher clip.  It's only a matter of time....

[peenie 1,812]

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

[thegeneral 2,490]

New boss same as the old boss.

[HotRod 35]

3 minutes ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

I learned about amortization when I got my first mortgage.  All that stuff that they make you sign that most people just ignore... I read it.  I asked questions.  My broker explained everything to me.

[Strike 4,800]

5 minutes ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

When I was 6 years old.

 

 

 

 

 

 

 

Just kidding.  But I've advocated forever that basic finance should be a high school course.  If kids understood things like compounding, amortization, etc.....they'd be so much better off by the time they entered the full time work force.

[supermike80 1,599]

19 minutes ago, peenie said:

I know they sell loans all the time, but how does that affect my interest and principal? Does anyone know? 

it doesnt.

Weve had our mortgage for over 20 years and I think its changed hands at least 3 times

[DonS 3,239]

Our mortgage just recently changed companies as well.  Probably the 3rd time this has happened.  Like everyone has said the only difference is who you send your payment to.

Not a big deal at all.

[Ron 'Tator Salad' White 114]

Sure it's because muh racism 

[DonS 3,239]

5 minutes ago, Ron 'Tator Salad' White said:

Sure it's because muh racism 

Shhhhhh....  Don't let her catch on to the fact that white ppl don't have to pay interest.

[Strike 4,800]

2 minutes ago, DonS said:

Shhhhhh....  Don't let her catch on to the fact that white ppl don't have to pay interest.

They used to send me the interest they collected from black people.

[Thornton Melon 594]

My house is long paid off, but if I had a dollar every time my mortgage was sold, I could've paid it off even sooner.

[Tree of Knowledge 1,430]

25 minutes ago, Strike said:

When I was 6 years old.

 

 

 

 

 

 

 

Just kidding.  But I've advocated forever that basic finance should be a high school course.  If kids understood things like compounding, amortization, etc.....they'd be so much better off by the time they entered the full time work force.

Exactly.  This should be required in high school.  

[TheNewGirl 1,192]

All of this is normal. 

Look at other loans you might have or did have. Interest will usually be higher than principle. Occasionally, the longer you pay less goes to interest since the balance of loan is going down. But that's years and years down the road for a mortgage. 

 

 

[jerryskids 6,162]

44 minutes ago, HotRod said:

I learned about amortization when I got my first mortgage.  All that stuff that they make you sign that most people just ignore... I read it.  I asked questions.  My broker explained everything to me.

Same.  My wife was borderline apologetic to the title agent as I read through all of the docs.  Then I found a mistake in the calculation of title insurance (in the insurance company's favor, of course).

Title insurance is a scam.  It is the job of the Title company to make sure I have a clear title.  If they fock up, I can sue them.  This is Amurka, dambit!  Instead, I'm compelled to buy insurance in case they didn't do their job well.  

[peenie 1,812]

Thank you all for your help. As usual, you geeks helped further my understanding of the financial world. 
Because of you guys I have stocks, crypto and a home!  In the sense that you've helped educate and encourage me.

[Hawkeye21 2,208]

1 hour ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

I learned about it in my early 20s.  Most of it I learned from my parents and other family.  I bought my first house when I was 23 and learned more from talking to the bank and general experience.

[supermike80 1,599]

2 hours ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

When you're born, your birth certificate gets sent in to the gubbermint.  If "caucasian" is shown as your race at birth, you are sent a special package in the mail.  Comes in a plain manilla envelope with no other details.  Only we get those.

Kidding of course...It's a good question.  I honestly don't know where I learned this stuff.  

[Nomad99 646]

2 hours ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

It was before your pancakes became flapjacks.......

[peenie 1,812]

28 minutes ago, Nomad99 said:

It was before your pancakes became flapjacks.......

[nobody 2,461]

2 hours ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

When my money is involved, I make it a point to know what's going on.  I spent years reading investing articles in my early 20s.

This particular issue.  I bought a house in my 30s and the  same thing happened to me.  Countrywide sold my mortgage to some other company.  They sent me some documentation on it, and I read it, so that's how I learned.

[IGotWorms 4,017]

1 hour ago, jerryskids said:

Same.  My wife was borderline apologetic to the title agent as I read through all of the docs.  Then I found a mistake in the calculation of title insurance (in the insurance company's favor, of course).

Title insurance is a scam.  It is the job of the Title company to make sure I have a clear title.  If they fock up, I can sue them.  This is Amurka, dambit!  Instead, I'm compelled to buy insurance in case they didn't do their job well.  

The insurance is to make sure you actually have a viable entity to sue. Without it title companies would just go up and nobody would ever get anything

[Alias Detective 1,312]

2 hours ago, Strike said:

When I was 6 years old.

 

 

 

 

 

 

 

Just kidding.  But I've advocated forever that basic finance should be a high school course.  If kids understood things like compounding, amortization, etc.....they'd be so much better off by the time they entered the full time work force.

50 year old former Business school teacher here.  Most schools did away with this type of education in exchange for a higher level of college prepared students.  It was in schools then taken away and now to some it's like a brand new idea to teach financial literacy to HS students.

[jerryskids 6,162]

54 minutes ago, IGotWorms said:

The insurance is to make sure you actually have a viable entity to sue. Without it title companies would just go up and nobody would ever get anything

Hmm... OK then. 

[F1erce 88]

4 hours ago, Strike said:

The time frame of the loan doesn't change because they sold it.  As far as the principal vs interest goes that's normal.  As time goes on that will slowly reverse.  Towards the end of the loan you will be paying almost all principal and very little interest.

This. My BIL did the “European method” I guess is what it’s called where he paid ALL the interest first and then paid off the house. Said he got his house paid off in 5-10 yrs, can’t remember exactly but it was somewhere in there and this was for a 4 story house at the country club. He was going to go into it in more detail with me but he ended up passing away & during the entire time he was sick I didn’t want to bother him with questions about mortgages  

[easilyscan 715]

In the early 90s, my brother who lived in California, complained that the local bank where he got his mortgage, sold it to another bank on the East Coast. 

Back then, almost everyone paid via check every month. Even though he mailed payments at least a week early, many times they claimed they were late & applied a late fee.

When I got my first mortgage in the summer of 1994, I asked the Bank president if they ever sold theirs to different banks. He said he couldn't guarantee they wouldn't do so in the future, but up to that point they hadn't. Luckily for me they never did.

ATTN OP: As several people have already pointed out, the early years of a mortgage are mostly interest. If it's possible, pay a little extra towards the principal every month. Even if it's as little as $50. That $50 will literally save you 100's of $ over the life of the loan. 

 

 

[frank 2,243]

5 hours ago, jerryskids said:

Same.  My wife was borderline apologetic to the title agent as I read through all of the docs.  Then I found a mistake in the calculation of title insurance (in the insurance company's favor, of course).

Title insurance is a scam.  It is the job of the Title company to make sure I have a clear title.  If they fock up, I can sue them.  This is Amurka, dambit!  Instead, I'm compelled to buy insurance in case they didn't do their job well.  

When I bought my house, I was signing the papers in a room with two real estate agents and my lawyer. The topic of title insurance came up. I didn’t know anything about it, and they were all very reluctant to give advice. I didn’t get the insurance and remember thinking “If something goes wrong, I’m suing everyone in this room.”

 

[Mike Honcho 4,728]

6 hours ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

10 years ago when I bought a house. Though, through many bad decisions I learned about the effects of bad credit much much earlier. 

 

[TheNewGirl 1,192]

6 hours ago, peenie said:

Why is it that you all know this stuff?? When did you start learning about this? Can you give me the age at which you started to learn about debt and loans and credit and real estate?

One of my majors was accounting and I've worked for bank for almost 30 years. 

Started learning at an earlier age tho from my dad, he also taught me how to do "mental math" otherwise known as the new math. At least with percentages. 

 

Sorry you might have had a crappy dad, peenie. ((hugs))

[peenie 1,812]

53 minutes ago, TheNewGirl said:

Sorry you might have had a crappy dad, peenie. ((hugs))

My Dad never owned a home. He lived in a parish and rented.