Getting a mortgage can be pretty exciting, especially if it’s your first time.
It can also be a very daunting process fraught with the potential for errors and missteps.
I’ve already discussed what to do before applying for a mortgage. Now let’s talk about what to do after.
1. Make sure it actually funded!
First things first, make sure your home loan 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 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.
2. Look at all 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, the cost of mortgage insurance, go over your closing costs, or simply recall your mortgage interest rate.
If you took out an ARM, you may 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…
3. If you’re due an escrow refund, inquire about it
It’s better to overestimate how much you’ll need to close as opposed to underestimate, 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.
4. Determine when your first payment is due
Here’s a biggie. Find out when the first payment is due. You won’t want to mess that one up…and 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 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.
5. Set up automatic payments or a recurring reminder to pay
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.
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 do 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.
6. Look out for a loan servicer change
While you may have taken out your mortgage with a certain bank or lender, there’s a good chance it might be serviced by a completely different one.
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 servicing duties.
The key here is to make sure you deal with the right company when it comes time to make your payments, 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 feel anything looks off.
7. Watch out for junk mail
Speaking of 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 it’ll look like it was sent from the company you got your home loan with.
I’ve already written about this at length, so take the time to understand what it’s all about if you have questions.
Another common one might be a solicitation to refinance, yes, just months after you took out your loan to begin with. Again, tread cautiously here.
8. Leave a lender review
Whether your mortgage experience was good or bad, it might be nice 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 reason to let others know.
If things were really bad, there’s also the CFPB, the BBB, and other means of filing a complaint.
You can also view the many complaints left about companies with regard to their mortgage lending practices.
9. Download/print an 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, it’s easy to download or print out an amortization schedule, which details where you hard-earned money goes each month.
You can see how much of the payment goes toward 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.
10. Now you can start spending again…
Finally, you can dust off your credit cards and start spending again. As I’ve warned many times, don’t start spending until after your mortgage funds.
It can lower your credit score and/or hurt your DTI ratio, both of which can threaten your overall loan approval.
However, once your loan funds you’re free to go out and buy new furniture and décor, buy/lease a new car, and so on.
Of course, you’ll want to be conservative to ensure you can handle your new mortgage payments.
The last thing you’ll want to do is get in over your head. And believe me, homeownership has lots of costs, some of them hidden or perhaps overlooked. So take your time to adapt.
11. Secure your 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/or supplementing one with your own measures, like 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 simply need to ask a favor.
12. Renovate early
I’ve made this mistake myself and wish I hadn’t when looking back. We often put off renovations until a later date, seeing that the home purchase and move itself are already quite a lot to handle.
But I’ve found that 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. You can also get a little messier if need be and 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.
I often feel that homeowners renovate for future buyers instead of themselves. Why not enjoy it yourself and make it easier at the same time?
13. Claim your property on Redfin/Zillow
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.
14. 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.
Also consider shopping your homeowners insurance from year to year to make sure you’re getting the best deal there.
15. Keep an eye on rates
Last but not least, once you’ve got 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 big money-saving opportunities arise.
This is especially true if you take out an ARM, which will eventually adjust.
In summary, a mortgage is a big responsibility, so act accordingly.