Getting a mortgage can be pretty exciting, especially if it’s your first time, but it’s also a big responsibility. Once the loan is secured, there are a few things homeowners should do to make sure the potential for errors and missteps are avoided. Here are a few tips for what comes next.
Understand the Closing
Closing is the final step before that house is finally yours! Your closing date is the day you become the legal owner of your new home. During the contract negotiation phase, you (the buyer) and the seller set a closing date, which must be listed on the purchase agreement contract. After the seller accepts your offer and earnest money, the money given to secure the contract, you can expect to wait a while before your actual closing date.
Even though you and the seller may agree on a closing date, your agents will probably work with your lender and title agency to suggest a timeline that allows them enough time to correctly execute their end of the deal. That could push your closing date out several weeks or even months after your offer is formally accepted.
Determine When Your First Payment is Due
Find out when the first payment is due, it’s not something you want to miss. 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 may 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 Auto Payments
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, though if you’re unsure the required sum will always be in your bank account each month, setting a reminder might be better.
It’s 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.
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.
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 homeowners’ 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 to ensure they do. And you should still pay close attention to what’s going on.
Double Check Funding
First things first, make sure your home loan really funded! Never assume anything when it comes to this much money. Just because you signed loan docs doesn’t mean your mortgage 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. So, hold off on any big purchases until the funds come through.
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. 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. You may want to verify the monthly payment amount, the cost of mortgage insurance, go over your closing costs, or simply recall your mortgage interest rate.
Preferred Lending Solutions is here to walk you through this process. If you have any questions about securing a mortgage or what comes next, contact us today.