Why do lenders sell mortgages?

Question

Why do lenders sell mortgages?

Answer 1

I asked this exact question to a local mortgage banker.  He said that his company continues to collect the monthly payments for the 30 years.  The 2nd company (who bought the loan) pays the 1st company $10 per month to collect the money and forward it to them.   I said "What's the point?"   He said they have 10,000 mortgages and each pays $10 per month.  The 1st bank gets $100,000 a month and all they have to do is put a stamp on an envelope (43 cents) and forward it on.  A cash cow./

Answer 2

Lenders make most of their money by loan origination  fees.  They sell their mortgages so that they can get their money back and then loan it out again to earn another fee.  They repeat this process over and over again.

Answer 3

Err - to make money?

It's a win-win deal. Taking a mortgage is signing into a deal to buy the house for double what it's actually worth.

Look at the bottom line of actually how much needs to be repaid!

However, you can have it now - and pay it back over 30 years. If you can't afford it anytime in between - they own it and you've lost all your money.

My advice is buy something really small - very very small Then work till you own it - then redecorate it and move on.  Even if it's a trailer to start - you can sell it on for what you bought it for -plus save your cash.