Most of the time, the bank to which you make payments on your mortgage is not actually the owner of your mortgage. Yes you may have applied for a home loan, close it and make payments to the same bank. But it may no longer own your loan. Often, banks sell mortgages Freddie Mac and Fannie Mae without notifying you. In this article we will discussed more on how banks make money from home loans. If you want more information as to how banks make money from home loans, you can do so by going to http://moneyreign.com/.

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2. Most of the time, the bank to which you make
payments on your mortgage is not actually the owner
of your mortgage. Yes you may have applied for a
home loan, close it and make payments to the same
bank.
But it may no longer own your loan. Often, banks sell
mortgages Freddie Mac and Fannie Mae without
notifying you. In this article we will discussed more
on how banks make money from home loans.
www.moneyreign.com

3. moneyBanks are charging origination fees on a firstmortgage product which include a fixed rate loan.
These fees are being charged as points. A point is 1%
of the loan amount.
This is the fee charged by the lender to the
homeowner applying and acquiring the loan.
Application fees and processing fees are some of the
other fees charged by lenders a way of making
money on a home loan.
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4. Another source of income for banks is the
underwriting fee. They charge the borrower fees in
underwriting the loan whether it is an adjustable or
fixed rate.
Homeowners should pay this fee when closing the
loan. In case the bank disapproves the loan or if the
loan did not close, the bank will charge the
underwriting fee.
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5. Banks owning loans collect interests as part of the
payment that is made each month. The payment of a
30 year, fixed rate loan is usually interest for the first
ten to twenty years.
The overall amount of interest due on this type of
loan will often exceed the loan’s original balance. The
interest of the loan is what the bank earns as an
income for lending funds.
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6. Some banks cannot afford to keep every home loan
that they provide. These loans are often packaged
into pools of the same loans and sell them to
investors.
Freddie Mac and Fannie Mae are the two biggest
government sponsored mortgage investors of the
country and they purchase mortgage loans from
lenders and banks and sell them as MBS or mortgage
backed securities to investors.
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7. Banks will get additional cash on top of the overall
loan amount when selling these home loans to those
companies.
Once Freddie Mac and Fannie Mae purchase the
home loans, the homeowners will still be spending
their monthly payment to the original bank from
where they applied for the loan and transact
business with.
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8. Freddie Mac and Fannie Mae will pay a servicing fee
to the bank for duties like accepting the
payments, providing the borrowers with customer
service, reporting to the major credit bureaus and
working with the escrow accounts.
This is the reason why the company you sent your
loan payment to does not necessarily own the home
loan that you are paying.
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9. If you want more information as to how banks make
money from home loans, you can do so by going to
Money Reign.
www.moneyreign.com

10. Brought to you by : www.moneyreign.com