Loan servicing is when a company or lender handles the administrative aspects of your loan process. This includes collecting monthly payments, keeping records of your payments and current balance, handling taxes, and other maintenance tasks.
Loan servicing is done by the financial institution that gave you your home loan. So, if you choose to use an agency to handle your owner financing, that agency will be in charge of loan servicing. This is a great option if you want the relaxed restrictions of buying a home from an owner but don’t want to deal with them directly.
When you go through an agency they’ll require a small fee for handling the servicing. For that fee, you’ll receive the convenience of knowing that everything is being handled. All you need to do is them the payment every month and they’ll ensure that everything goes smoothly.
In case all of this is a little confusing, let’s break down how the process works.
- You approach an agency that handles owner financing and you seek approval.
- They help you find the perfect house.
- You, the agency, and the seller work together to reach an agreement.
- You move into your new home.
- You send the agency your monthly payment and they pass along the funds to the home seller.
- The agency handles all of the financial aspects and keeps you up-to-date on your payment status and remaining balance.
- If a financial problem arises, the agency can help you make a new plan that’s right for you.
Your loan servicer is crucial to helping you stay on track. A good loan servicer can be the difference between staying in your home and leaving it, so you want to make sure you’re choosing the right team.
With that in mind, let’s discuss what you should consider when choosing a loan servicer.
- Research the company’s history to ensure they’re completely reputable.
- Look into what services they offer and what fees they charge.
- Ask about their areas of expertise and look for customer reviews.
- Find out what the average processing time is.
- Look for an agency that works with you even if you have no credit, bad credit, or short credit history.
- Ask if they’ll require a down payment from you and what that payment would be.
- Find out what your communication and payment options are. Can you contact them and pay your monthly statement online?
- Find a company that answers all of your questions and excels at customer service.
Choosing the right loan servicer can make the home buying process much easier. Take some time to find a team you feel you can work with before you go house hunting. That way, you’ll know you’re prepared to make an offer when you find the right house.