After sitting down at the mortgage closing table to sign all the paperwork, you get the keys and can breathe a sigh of relief. But before you tuck all those mortgage papers away for good, there are at least 5 things you still need to do after closing to make sure everything is on track.
1. Figure Out the Start Date of the First Payment
Your lender or title company should have let you know this important fact before or at closing, but with so many papers and numbers being thrown at you, it might get missed. Your escrow account often requires enough money from you at closing to cover the first partial month of mortgage payments, but you will need to know when the next billing cycle begins.
2. Set Up Automatic Payments
The safest way to be sure you never miss a mortgage payment is to set up automatic payments from your bank to the lender. Most mortgages are due on the first day of the month, so you may want to have the payments hit a day or two before the due date to avoid the possibility of late payments. If you are not entirely sure your bank account will have enough money to cover the mortgage each month at the same time, you can at least set up a monthly reminder that can help you stay on top of payments.
3. Be Aware of Changes in Loan Servicers
Even though a certain lender originated your mortgage loan, it is very likely to be sold off to another lender or loan servicer. This means you will have to change the address where you send your payments, but it generally does not result in any other differences for you as a borrower. You should receive a letter in the mail with a notice of transfer for your loan funds. Do your due diligence to make sure the letter is legitimate and that the servicer listed is truly in possession of your loan.
4. Beware of Look-alike Junk Mail
Once you officially get the title transferred in your name, you will get junk mail from all sorts of companies. You need to be particularly careful with letters that look very official and important but are just trying to get you to buy something. For example, some mortgage protection insurance companies will send out mail that looks like it is actually from your lender in order to make you think it is an insurance you need. In reality, mortgage protection insurance is a totally optional, extra insurance that helps you pay your mortgage in the event of death, disability or unemployment.
5. Be Sure Your Property Taxes and Insurance are Paid on Time
In many cases, the lender pays your taxes and insurance by collecting them in your escrow account, so you will be paying a small chunk of them each month. It is still your responsibility to make sure the lender does make the payment. If you pay for your taxes and insurance yourself, find out when they are due and how much they are. Be diligent about setting aside funds every month as a lapse in property taxes can cause you serious financial troubles.
After you check of that list of 5 things, you can finally relax from mortgage work and finish unpacking!
If you or anyone you know is in the market to buy a home or refinance their mortgage, please contact us at California Housing Administration today by phone at 619-327-1400 . We love helping clients who have been referred to us by you.