Homes
Lessons From a First-Time Home Buyer: When Your Mortgage Servicer Changes
Something I’d absolutely never heard about prior to buying a home was the idea that your mortgage might just randomly be sold to another company. Sure, I was familiar with the concept of companies selling off delinquent debt to collectors, but it never crossed my mind that lenders would elect to transfer their mortgages in good standing to another lender. Yet, that’s exactly what happened to us within only a few months of owning our house. At the time, word that our mortgage had been sold came with the note that we’d continue working with (AKA paying) the same servicer for the time being.
Well, now that’s changed too. So what’s it like moving from one mortgage servicer to another? Let me share our experience doing just that.
Navigating Changes to Your Mortgage Servicer
From mortgage sold to servicer changed
As I mentioned, we learned that our mortgage had been sold a few months ago (which was pretty shortly after we moved into the house). Even if I wasn’t aware of this possibility ahead of time, I did quickly learn from other homeowners that it was common. So, I didn’t really think much of it — especially since we keep using the same company and platform to make our monthly payments.
The reason I bring this up is because, like in our case, a switch in mortgage servicers might not line up with your actual mortgage being transferred. In other words, be prepared for this to happen at any time.
How we found out about the move
We learned about the change in servicer on June 13th, with the transfer set to take place on July 1st. In my mind, that was a pretty short turnaround (after all, our last payment to the old company was already made before we even knew it), but apparently it’s typical to receive notification about 15 days or so before the change is set to take place. So, really, we may have even been a couple of days ahead of that.
However, that might also be because we got our notice via email. I presume this is because we opted for paperless billing. Nevertheless, the PDF they sent us seems formatted for mailing, so I’d imagine that’s what would have happened otherwise. Personally, I think it’s probably better this way as, due to how much spam we got when we first moved, I probably would have discounted the legitimacy of a physical letter — at least for a few minutes.
Another thing that crosses my mind is, “what if we had been traveling?” After all, a two-week vacation is not crazy, so it’s conceivable that we might have missed mail from our former company and not realized we were being moved until after the first payment was due. Thankfully, that’s what e-mail is for. Plus, as we’ll talk more about later, this might not have been as catastrophic as you might think.
Getting set up the new servicer
If you’re like me, you might want to set up an account with your new servicer right away and get a “lay of the land,” as it were. Well, then you may want to prepare yourself for disappointment and frustration as this was not possible. It would be a few more days before we could start setting up an account. What’s more, even though our service transferred on the 1st, we were informed that we wouldn’t have full access to the platform until the 7th!
Now, you may be wondering how we made our payment on the 1st if we couldn’t use the site until nearly a week later. Well, let’s talk about that.
Making the transition and paying our new servicer
As soon as we realized that there would be this gap, we panicked a bit. On the one hand, this had to be normal since they were the ones imposing this delay — but, on the other hand, no one likes the feeling of making a late payment on your mortgage. The good news is that we saw on our new servicer’s site that no late fees would apply during your first 60 days. This was definitely a relief… even if it still felt wrong to have to pay late.
When we were exploring our options, we did see that, if you sent a payment to your previous servicer, they’d forward it for you. So, we decided to try this so at least we could be on time. Yet, since we scheduled the payment for the first, our payment did not go through and we got a note from the company telling us to look to our other communication regarding the switch in servicers. While it was worth a try, ultimately, we just had to wait it out.
On the credit report front
Finally, I also want to highlight the fact that moving mortgage servicers may also mean some interesting activity on your credit report. In my case, looking at Credit Karma, it shows that I paid off my mortgage (if only!) — and I even got an alert from them congratulating me on the accomplishment. I presume the new servicer account will show up soon, but it hasn’t done so yet.
As for whether there’s an actual impact on your credit during this process… it’s hard to say. So far, I haven’t noticed any swings so I’m inclined to say the impact is minimal at worst. Still, if you have credit monitoring services enabled, you might get a few falsely exciting notifications along the way.
Now that we’re all set with our new servicer, I’m happy to say that they have a lot of the same tools and functionality as our old one. Thus, the move over hasn’t been a big deal. Despite that, though, it was definitely surprising to be told that we not only needed to pay someone starting in just a couple of weeks but would also effectively be forced to make a late payment in the process. Alas, this is all completely normal — but, oh as with so many other things, you might not know it as a first-time homeowner.
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