What to expect after closing on a home

You’ve signed your paperwork and your keys are in hand. Congratulations on your new home! What’s next? Some of the things that come with being a new homeowner may be surprising. If you’re wondering what to expect after closing on a home, we’ve got you covered. We’ll break down what you need to know in several key areas.

Payment basics

You prepay the interest between your closing date and your first payment date, so the initial due date could be up to 60 days after closing. If you pay monthly, your payment is due on the first of the month. Review your closing documents and welcome letter for your due date and grace period.

Biweekly payments split your payment in half, picking a date in the first 14 days of the month. Payments are made every 2 weeks making budgets more manageable. Because there are 52 weeks in a year, you have the option of making an extra half payment applied to principal when a third payment falls in the month, saving interest.

When you start biweekly payments, you pay ahead on your loan. This means your first payment will come quicker regardless of interest prepaid at closing. If you switch to biweekly payments at some point after your loan closes, you need to be a month ahead on your payment.

If you choose to set up autopay, this is done within your Rocket Account. You should be receiving communications from us shortly after closing. If you set up autopay for Rocket Mortgage^® rather than your bank, this ensures you’ll be making the correct payment if there are updates to escrowed property taxes and homeowners insurance.

If you chose paperless documentation during the origination process, that also carries over to your monthly mortgage statement and the 1098 you receive for tax season.

Escrow ins and outs

Escrow accounts established at closing allow spreading the cost of your real estate taxes and homeowners insurance premiums throughout the year rather than making one large payment. If there’s mortgage insurance tied to your loan, it’s paid out of your escrow account.

Mortgage insurance is required on certain loans, but it does enable you to make a smaller down payment. On conventional loans, you can request it comes off once you get to 20% equity in many cases. On FHA loans, it’s for the life of the loan if you make less than a 10% down payment. If you do meet that threshold, it’s off after 11 years.

Once a year, lenders conduct an escrow analysis. In an escrow analysis, your servicer looks for changes in your homeowners insurance premiums and property taxes to make sure the correct amount is collected.

If your amounts have decreased over the year, you may get an overage check. If there’s a shortage due to increases in property taxes or homeowners insurance, you can spread that over the next year or pay the shortage in full.

Your servicer may perform two analyses or one that doesn’t cover a full year after you close so that you can align with your state escrow analysis schedule.

A couple of quick tips to keep your costs down:

• When you switch homeowners insurance policies, notify your servicer. Sending the refund you get from your prior carrier will help you avoid a shortage as the policies are paid in advance.
• State and local authorities often offer homestead exemptions that reduce the taxable value of a home used as a primary residence. Make sure you apply for these.

If you live in an area with a homeowners association, your HOA dues aren’t escrowed. Prioritize paying these because the HOA can often place a lien on your home if you don’t.

Third-party mail

Shortly after buying a home, you’ll start receiving lots more mail. Some of it you need to know about, other items may be a nuisance.

One thing you may be on the lookout for is an investor letter. In the normal course of business, most mortgage lenders sell your loans to major mortgage investors (Fannie Mae, Freddie Mac, FHA, VA, etc.) to fund the American dream for more homeowners by recouping funds without having to wait up to 30 years for the loan payoff.

Getting this letter doesn’t mean your servicer will change. If your servicer changes, you’ll receive a separate letter with details regarding where to make your payment moving forward. Many lenders retain servicing rights.

Unfortunately, you can expect to get a lot more other mail as well. Property records are open to the public. Companies often pay for services that give them notifications on when title changes hands or new liens are placed.

Because viewers of these records can see who placed your lien, they may use the name of your mortgage lender to get you to open it while offering you the chance to buy a home warranty or a mortgage life insurance policy. While you may decide some of these offers are helpful, know that Rocket Mortgage doesn’t endorse third parties.

We’re here for you

Our relationship with you goes beyond closing your mortgage and collecting your payment each month. We believe everyone should have their shot at a more prosperous life. That means making sure you have the right mortgage but also increasing your visibility and control in all areas of your financial life. Let’s unpack that.

Your home is often your biggest monthly expense. No one should be paying more than they have to. We do free periodic mortgage reviews. We’ll look at your current mortgage and go over your goals. If you can save money by getting into a lower rate or use your existing equity to consolidate debt or improve your home, we’ll help you refinance.

From an everyday payment standpoint, we want to make things as easy as possible no matter how you wish to interact with us. You can make your payment online 24/7, but there’s no charge if you wish to pay by phone or mail. You can use our interactive voice response line at (800) 646-2133.

Your home loan is just one piece of a financial puzzle that can sometimes be tricky. Our friends at Rocket Money℠ allow you to stay on top of it all by connecting your accounts and creating personalized budgets based on your goals. The app also keeps track of those subscriptions we’ve all forgotten about, often allowing you to cancel with a click.

The bottom line: Partnering in your homeownership journey

When you close your loan, that’s just the start of your homeownership road. Life also takes a lot of twists and turns. You should know that whether you’re buying your first home or fourth, we’ve got you covered all along the way.

Thanks for being here. Hop into your Rocket Account and check it out.