I am house hunting and I'd like to understand something. I am currently running into a scenario where I just simply don't understand it at all. Here is a little background story:
I am looking at a new-build house and they are giving a $5k credit on closing costs if you go through a particular lender for the mortgage. So I start talking to a rep at this "lender".
This company isn't going to "service" the mortgage. The way she explained it to me, upon closing on the house, her company will pay for the house cost and then subsequently pass off the mortgage to an actual bank to "service" the mortgage. So in other words, she works for
CompanyA. She is saying I go through them, and then upon closing
CompanyA will pay the house's cost, and they will then in a very short time pass the mortgage on to a bank (Wells Fargo, BB&T, etc.) to service the loan for the mortgage duration.
I simply don't understand why they would do this, or what I would benefit from this at all (besides the savings on the closing costs). If
CompanyA gives my mortgage to
BankA to service for the next X years, why wouldn't I just go to
BankA initially? What does
CompanyA benefit from?
She said it was the different between a "mortgage banker" (
CompanyA) and a "mortgage servicer" (
BankA). She said that her company, upon "locking" down the interest rate will then redeem that "locked" interest rate based off of their daily preference.
That scares me for a few reasons:
- I have no idea which bank I will be working with for the mortgage duration
- I feel like this is a "middle man", and I don't see how I will benefit
- I don't know how this could affect me negatively
- Why doesn't everybody do this if it is so beneficial?
Can anybody answer these questions? My research isn't showing a lot of information, and I don't want to feel like I'm getting "worked over" by going through
CompanyA to get to a random bank, vs. going directly to a bank to handle the mortgage.
Please, if you need any more information I'd be happy to supply it. And I apologize in advance for my ignorance on the topic.