All mortgage loans come with their own set of rules and guidelines. Mortgage lenders approve loan applications using these universal guidelines and once a loan is approved the loan can be sold in what is called the "secondary" market and VA loans are no different.
VA lenders can issue a loan then decide whether or not to keep it for the interest payments or sell it to another VA lender. Once a loan is sold, the original VA lender gets paid by the buying company and has money to issue more VA loans.
Making a Commodity
When lenders buy and sell VA loans in the secondary market, they know beforehand what they're buying. A mortgage loan under a specific loan amount that conforms to VA lending guidelines. A VA loan in this fashion is essentially a commodity; one VA loan is like the next VA loan in terms of credit, income and loan amount requirements.
Because these loans are all underwritten to the same set of standards, lenders know in advance what they're buying without having to individually evaluate each VA loan to be sold. Lenders do audit their purchased loans but underwriting a VA loan with universal VA guidelines streamlines the buying and selling process.
Your Loan is Sold
What happens if your loan is sold? The first notification that your loan will be sold is with a "goodbye" letter, a letter from your current lender telling you that your loan is sold and identifies the new lender. You will then receive a similar "hello" letter from your new lender, providing you with their contact information, your account number and general customer service information.
However, not one thing changes in terms of your loan. Your rate doesn't change, your due dates don't change nor your monthly payments or any other facet of your original loan. Even if your loan is sold 10 times, nothing can change the terms of the original note. In effect, if your loan is sold, nothing really happens. You simply make your check to a new lender.
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