You can count on the fact that your mortgage loan will be sold because mortgage lenders make the majority of their profits selling loans on the secondary market. There is no brand loyalty from consumers with mortgage loans; nor should there be. Mortgage companies and brokers routinely exploit their borrowers to make a buck, which is why you should shop for a loan, not a lender when mortgage refinancing.

Many homeowners think that once they’ve closed on a mortgage loan, the lender patiently sits back and collects interest on the loan. Mortgage lenders actually make the majority of their profits selling mortgage loans on the secondary market to insurance companies and investors. Mortgage brokers and bankers are in the business of originating mortgage loans; meaning that they make money from origination fees and retail markup of your interest rate.

Not only can you count on the fact that your mortgage lender will sell your loan, but you actually gave permission for them to do this when you signed your loan contract. There is an obscure passage in every mortgage contract that addresses the “Servicing Rights” for that loan. Mortgage companies are required by law to disclose the fact that they will sell your loan along with the percentage of loans they sold last year. When you sign the loan contract you are in fact acknowledging that the lender told you that they would do this and you gave permission for them to sell the loan.

The bad news for you is that when the lender sells your mortgage, you could lose benefits that were promised to you by the old lender. Banks are notorious for offering a slew of benefits to sweeten the deal with their customers. You could potentially get free accounts, safe deposit boxes, notary services, and reduced fees for many bank services by taking out a mortgage loan. What happens when the bank sells your mortgage loan?

You guessed it; all the perks your bank used to butter you up when taking out that mortgage loan evaporate. This isn’t of course the only reason to avoid your bank when mortgage refinancing. Banks routinely charge Service Release Premium with their mortgage interest rates. Similar to Yield Spread Premium, if you agree to pay this unnecessary markup of your mortgage interest rate you will overpay thousands of dollars every year for that loan.

You can learn more about mortgage refinancing while avoiding costly mistakes with a free, six-part mortgage tutorial.