Getting a mortgage can be pretty exciting, especially if it’s your first time. It can also be a very daunting process that's fraught with the potential for errors and missteps. Maybe you’ve already been discussed what to do before applying for a mortgage. Now, it's time you learn about what to do after.
Ensure Mortgage Funds Are Available
First things first, make sure your home loan is really funded! Never assume anything in this world, especially when it involves a six- or seven-figure number. There have been countless stories of folks going out and buying big-ticket items days before their mortgage was set to fund, only to find out that it was a big no-no.
Just because you signed loan docs, that doesn't mean your mortgage is funded. For example, refinance transactions generally require a 3-day rescission period from the day you sign to the day they fund. The last thing you want is for your lender to receive an alert about an undisclosed new debt, which could force them to re-run your numbers and delay your loan closing.
Make A Final Review Of Your Paperwork
While you should have gone through all your paperwork line by line before you signed and the loan ultimately funded, it doesn't hurt to glance at it again now that the dust has settled. It can be a bit of a whirlwind while meeting deadlines and feeling high levels of stress. So once that's all done, it can be a good time to sit down and review at your own pace with fewer distractions.
For example, you may want to verify the monthly payment amount and the cost of mortgage insurance, go over your closing costs, or simply recall your mortgage interest rate. If you took out an ARM, you might want to check the margin and index, along with the first adjustment date. While you're at it, set aside your paperwork in a safe place.
Inquire About An Escrow Refund
It’s better to overestimate how much you’ll need to close as opposed to underestimating, especially when it comes to a mortgage transaction. For example, cash to close is often padded to allow for any escrow shortage that might be realized. The last thing you want is a delayed closing because the funds aren’t sufficient. Often times, you’ll receive a check for this overage if it’s not needed. Follow up with the escrow officer to determine if you’ll be receiving a check and where you want it sent.
Check When Your First Payment Is Due
Here's a biggie. Find out when the first payment is due. You don’t want to mess that one up. Sometimes, with so much other stuff going on (like packing and moving), it can be overlooked.
Remember, mortgages are paid in arrears, unlike rent. So your first payment will generally be due after a full month of ownership has taken place. If you closed late in the month, the first payment might be due in 30 days, whereas those who closed early or mid-month may not have a payment due for 45 days or longer.
Set Up Payment Reminders Or Autopayments
For you to avoid any mortgage payment mishaps, it might be wise to either set up automatic payments or at least a recurring monthly reminder. Both automatic payments and reminders work just fine. If you’re unsure if the required sum will always be in your bank account each month, setting a reminder might be better.
While mortgages are generally due on the first of each month, most loan servicers accept payments until the 15th without it being considered past due. So it’s possible to set a reminder to pay your mortgage at the beginning of the month. If you make automatic payments, they will likely withdraw the funds from your bank account on the first of the month or close to it, depending on if it’s a business day or not.
Be Cautious With Servicing And Offers
While you may have taken out your mortgage with a certain bank or lender, there's a good chance that a completely different one might service it. Typically, you'll receive a letter in the mail shortly after your loan funds with a notice of transfer. This document should include the name of the loan servicer taking over the servicing duties.
The key here is to make sure you deal with the right company when the time to make your payment comes, which won't necessarily be the originating lender. While you're at it, watch out for scammers pretending to be your loan servicer. Vet them if you feel anything looks off.
With regards to shadiness, your junk mail will likely go into overdrive when you first move into a new place. Because it's public record, tons of companies will send you lots of seemingly official and important looking notices in the mail. A common one is mortgage protection insurance, and there's a good chance that it'll look like it was sent from the company you got your home loan from. Another common one might be a solicitation to refinance, yes, just months after you took out your mortgage. Again, tread cautiously here.
Leave A Review On Your Lender
Whether your mortgage experience was good or bad, it might be helpful to leave a review so others can benefit from what you went through. If your loan officer or loan team did a great job, taking the time to praise them could be a nice gesture. You can also refer them to a friend or family member.
Conversely, if you were lied to or had a rough go of it, there may also be a reason to let others know. If things were terrible, there's also the CFPB, the BBB, and other means of filing a complaint. You can also view the many complaints about some companies and their mortgage lending practices.
Print Your Amortization Schedule
You've got a big loan now; don't you want to see how it's all going to go away? Assuming you do, its easy to download or print out an amortization schedule, which details where your hard-earned money goes each month. You can see how much of the payment goes toward the principal (actual ownership) and how much goes toward interest (the bank's profit) each month.
It may even encourage you to pay off the mortgage ahead of schedule if you find that the total amount of interest due is hard to swallow. Your loan servicer should provide this, or you can simply input your details into a third party's calculator instead. Either way, it's good to know where you stand.
Secure Your New Home
Once your loan funds and that stressful moving part is finally finished, you should take steps to secure your property. This might include installing a security system and supplementing one with your own measures. You can install dowels in the windows and sliding doors, along with cameras for surveillance.
Another smart thing you can do is get to know the neighbors. Aside from being social and friendly, it's important to have allies nearby who can help out if need be. You can look out for one another, and they can give you the inside scoop on the neighborhood, including anything to watch out for or anything they’ve seen in the past. Exchanging phone numbers can also be helpful if situations arise or if you need to ask a favor.
Start Making Renovations Now
Many new homeowners often put off renovations until a later date, seeing that the home purchase and move itself are already quite a lot to handle. However, making improvements early on can be beneficial for several reasons. First off, it’s just plain easier because you haven’t moved in yet. So you don’t need to move everything around to accommodate a contractor and their team. It can also get a little messier if need be, and you can avoid the noise and all-around chaos involved with home improvements.
Additionally, you can enjoy the upgrades as soon as possible, as opposed to making these changes years later, after you finally say “enough is enough” to the old dirty bathroom or outdated kitchen. Usually, homeowners renovate for future buyers instead of themselves. Why not enjoy it yourself and make it easier at the same time?
Update Your Property Ownership
After closing, you can also claim your newly-owned property on websites like Redfin and Zillow. Both offer an owner dashboard where you can keep track of your home’s value, local sales activity, competition, and so on, which is helpful to see how your investment fares over time. You can also edit home facts and pictures if you make changes, which could impact the valuation these companies assign to your property. That could affect a future sale, as buyers often look to these estimates (Zestimates), whether they're accurate or not.
Pay Your Insurance And Property Taxes
Whether your lender pays it on your behalf (via an escrow account), or you pay it yourself, make sure your homeowner's insurance policy and property taxes are paid on time. If you pay for these items directly, be sure to earmark funds because they can be quite costly. If your lender releases funds via escrow, you're still responsible for ensuring that they do. And you should always pay close attention to what's going on. Also, consider shopping for your homeowner's insurance from year to year to make sure you're getting the best deal there.
Monitor Mortgage Rates
Last but not least, once you have a mortgage, you'll need to devote some time to it. That means keeping an eye on mortgage interest rates over time to determine if it makes sense to refinance. For example, at any given time, millions of borrowers generally stand to benefit from a refinance but don't (for whatever reason).
A mortgage, even if it’s a 30-year fixed, isn’t totally a set-it-and-forget-it deal. You still need to stay in the know in case significant money-saving opportunities arise. This is especially true if you take out an ARM, which will eventually adjust.
No matter how big or small your mortgage, there are steps you can take to be able to manage mortgage payments and your newly acquired property properly. In summary, a mortgage is a big responsibility, so act accordingly. And enjoy your new home!