The mortgage process doesn't end at closing
Things to do after closing on your home loan
- Change your address with all necessary parties.
- Review your homeowners insurance.
- Keep close tabs on your monthly mortgage statement.
- Be prepared for your loan to be sold to another servicer.
After you have closed on the purchase of your new house, there is plenty of work to be done. The moving process can be a long and arduous one. Maybe certain rooms need a fresh coat of paint; maybe some will need a complete remodel.
But just because your loan is closed doesn't mean your financial responsibility is over. Even before you make your first mortgage payment, there are several things you should take care of in short order.
Change your address
This seems like an obvious step, but it's critically important to change your mailing address. Otherwise, you run the risk of missing any bills that are mailed to you, and missing payments on those could damage your credit.
Among those you'll want to inform of your new address are any banks, credit unions, credit card companies or any other financial institutions you deal with. You will need to register your car at your new address, and change the address listed on any insurance policies, including auto, health and life.
Go through every meaningful piece of mail you receive, including bills and magazines, and make sure to update your address with all of those senders. Finally, make sure to register your new address with the United States Postal Service, which will forward your mail to the new address for up to one year.
Know your costs
Take time to thoroughly review your homeowners insurance policy. See what is covered and, more importantly, what is not covered. If you live in an area susceptible to certain natural disasters, you may want to consider adding insurance coverage for those potential risks. It's also worth checking to see what options are available to lower your rate, or if you can bundle your policy with an auto-insurance policy to save some money.
Also keep a close eye on your monthly mortgage statement. Even if you have a fixed mortgage rate, your monthly payments may change over time. Many homeowners have their mortgage principal and interest (P&I), homeowner's insurance and property taxes combined into one payment. Although the P&I for a fixed-rate loan will remain constant over the course of your loan, those other fees may change.
Prepare for a loan sale
One common misconception about mortgages is that your chosen lender is the same company you will work with for the entire length of your loan. Oftentimes, lenders will sell a closed mortgage to another institution, perhaps to free up capital to fund another mortgage.
Homebuyers can't prevent their mortgages from being sold, but there is typically nothing to fear from such a sale. The terms of your mortgage will remain the same, so long as you continue your payments
One thing to watch out for, however, is that your payments are going to the right place and are properly credited. By law, if your mortgage is sold, your original lender must notify you at least 15 days before the transfer is completed, and your new servicer must notify you no more than 15 days after the transfer date. If you don't receive proper notice, a complaint can be filed with the Consumer Financial Protection Bureau (CFPB).
"The notice should disclose to you the date on which your old servicer will stop accepting payments and the date on which your new servicer will begin to accept payments," the CFPB says. "It should also disclose the new servicer’s name, customer-inquiry address, telephone number for an employee or department of the new servicer, and the effective transfer date."
Borrowers also are given a 60-day grace period after such transfers, during which time servicers can't charge late fees if payments are sent on-time, but to the original lender. Still, if you receive notice that your loan has been sold, make sure to keep an eye on your statements for the next several months to ensure your payment is being properly credited. If it isn't, contact your new servicer immediately.
Marketing materials alert
First-time homeowners may be amazed by the amount of new mail they receive, and how much of it offers deals. Some of these, such as coupon packs for neighborhood businesses, are normally welcomed. Others, however, can become a nuisance.
The CFPB warns that new homeowners are likely to receive offers for things such as credit cards, life insurance, refinance offers, payment plans and more. Be careful with all of these, because many of the offers that will be mailed to you may be worse, or more expensive, than the services you already have, or ones you can purchase after just a little research.