Post-Closing: What To Expect After You’re Given the Key
Congratulations! Your journey to homeownership is almost complete. You were pre-qualified for a home mortgage loan. Spent countless hours finding your dream house. Had your offer accepted by the seller (quite a feat in today’s competitive market!). Made it through inspections. And sat with your realtor, lender, and lawyer to sign the closing paperwork. You’re now ready for the final stages of the mortgage loan process – post-closing and servicing your loan.
It’s an exciting time. After months of searching, dreaming, and working through the details, you likely feel like you’ve summited a mountain when you leave the closing table. The “hard work” is done, so bring on the house key, unpacking, and housewarming party… right?
In reality, there’s still more work to do. Post-closing is one of the most overlooked steps of the loan process for homebuyers, and it’s no wonder why. A good mortgage lender and title company will work behind the scenes to seamlessly complete the needed transfers and documentation. But that doesn’t mean you’re in the clear. By knowing what to expect after your home mortgage loan closes, you can take the necessary next steps to save money down the road.
At Guardian Mortgage, we are here to help you every step of the way. The following guide shares what happens after you leave the closing table, what loose-ends are tied up to make the property yours, and what steps you need to complete during your first year of homeownership.
After You Leave the Closing Table
For months, your mortgage lender has been working to ensure you’re able to purchase the house of your dreams. Throughout your home loan process, your mortgage lender has:
- Helped you determine the best loan option, worked to qualify you for a loan, and locked in a desirable rate.
- Processed your loan, including verifying employment, gaining a residential appraisal, ordering title work, and collecting insurance.
- Underwritten your loan to ensure it meets the company’s acceptable level of risk, and provided final loan approval.
Now it’s your Closer’s turn to shine. Before reaching the closing table, this person will have determined accurate financial numbers for your loan and readied all the documents needed at closing. After leaving the closing table, the next step is checking all the paperwork in detail and start closing the files. There is a tight deadline for each closing file, and some can take up to two hours. The Closer works efficiently to complete the process for you.
Meanwhile, your title company is working to transfer the funds for the house. Once this is complete you get the keys to your new home and can take possession.
Tying Up Loose Ends
While you get to work making your new house a home, your mortgage lender and title company will continue to wrap up loose ends.
On the day of closing, the title company will overnight your documents to your lender for a final review of the loan.
The title company will also disperse funds to any parties who have not yet collected payment. This includes:
- Paying the seller’s mortgage, home equity loans, or judgments.
- Getting any liens on the property released.
- Settling any outstanding utility bills.
- Squaring up taxes and paying other outstanding fees, such as homeowner’s association fees or condominium dues.
Also included in these loose ends is filing all the necessary documentation with the Registry of Deeds in the county where your new property is located. These documents include:
- The deed to your property, which you will receive via mail when the process is complete. The deed shows the transfer of ownership between the seller and buyer. It includes a description of the property, the names and addresses of the parties involved, and your signatures. The deed is different from the title, which is the legal rights of ownership to the property, including the rights to sell.
- A Deed of Trust, which goes to your lender. It shows that you agree to pay your loan, and that the mortgage company holds the legal title to the property until the loan is paid off. This is very similar to what you’d experience if you were financing a vehicle. The lender would hold the title to your vehicle until the loan was paid, and then the title would transfer to you upon pay-off.
- Powers of Attorney. This document grants a person you designate the right to act in your place to buy, sell, finance or refinance a home. This is important to have on file in case for any reason you are unable to complete these tasks yourself.
Title insurance policies are prepared by your title company and provided within 30 days. Title insurance protects you from financial losses and legal expenses that could come if there is a defect in the title to your property. Unlike other forms of insurance, this is a one-time fee that is paid at closing.
Finally, your mortgage company will send you details on how to pay your mortgage each month in the form of a first payment letter. Typically, you get a month off from making a mortgage payment. Your first payment will come due one month after closing.
Servicing Your Loan
At this point, typical mortgage companies sell your loan to an investor or another financial institution. Mortgages are often sold for two reasons: to free up capital or to make money quickly. It takes your mortgage lender the length of your loan term (often 30 years) to make the full profit off your interest payments. That’s too long for some lenders to wait – so, they sell and make an instant commission. When a lender chooses to sell a loan, they sell the servicing rights.
At Guardian Mortgage, we’re not your typical lender. Unlike many mortgage companies, we do not take this approach to mortgages. Our loan professionals care about our customers, and we choose to invest in our long-term customer relationships by servicing most of our customer loans. This means all you have to do is pay your monthly mortgage payment on time and we will take care of the rest. We will:
- Maintain accurate records of the loan balance.
- Collect escrow funds to pay property taxes and insurance.
- Send you the tax and interest statement (1098 Statement) for taxes.
- And much more.
To-Dos for Year One of Homeownership
To ensure you are taking full advantage of homeownership, make yourself a note to complete the following to-dos during your first year in your new home. We suggest adding these dates to your planner or digital calendar to help make sure you won’t forget when important dates come due.
- File a homestead exemption if your new home is your primary residence. A homestead exemption lowers the taxable value of your home. This means your property taxes will decrease, which could add up to considerable savings for you. The process for filing a homestead exemption is different in each state. Check with your county or local tax assessor for details.
- Obtain pro-rated taxes from the last owner of the property. The seller will take responsibility for property taxes up until the day the house is sold. As the buyer, you take on the property taxes from the date your purchase is final. By pro-rating the taxes for the year, you and the seller ensure the property tax payment is fairly distributed.
- February/March/April (Tax Time)
- Whether you like to do your taxes early or wait until closer to Tax Day, make sure you’ve made a note to take advantage of the various mortgage tax deductions available to you. One of the most important deductions is the mortgage interest deduction. With this deduction, you can subtract the interest you pay on your mortgage loan from your taxable income.
- Watch for an escrow analysis. This typically occurs in February. If your mortgage company pays your property taxes and homeowner’s insurance for you, you likely have an escrow account. Part of your mortgage payment goes to pay down the principal and interest on your loan, and part of the payment funds your escrow account. Your mortgage lender will analyze your escrow account each year to determine if the proper amount of funds are being collected. If your taxes increase, your lender may adjust your monthly escrow payment. This is one of the scenarios in which your monthly mortgage payment can increase.
- Property taxes increase after construction, so watch for this when your mortgage company conducts your escrow analysis and rebalance. If the county appraised your property prior to the home’s completion, your property taxes will be much lower than they will be once it is appraised with your house on the land. If you did not escrow money for taxes on the “improved value” of the land, you could see a significant jump in your escrow payments to cover the difference.
- Contest your property value if needed. Your property appraisal is directly tied to the amount you pay in property taxes. Each year, around April or May, you’ll receive an appraisal from the county. If you feel your property appraisal is too high, you can contest the appraisal with the county. Each county will have its own set of rules and contention deadlines, which should be listed on your appraisal.
Enjoy Homeownership Post-Closing
The home buying process doesn’t end at the closing table, but if you stay on top of the post-closing process it should be smooth sailing. With a clear understanding of what to expect post-closing on your mortgage loan, you’ll be better prepared as a homeowner.
If you have questions about the post-closing process, contact your Guardian Mortgage professional. We are here to help you every step of the way.
Guardian Mortgage and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.