From searching for a house and placing an offer to signing the contract and moving in, buying a home can be a long and exciting process. Once you close on your new home and receive the key, you may wonder what actions to take next.
Explore the final steps of closing on a house and what actions you can take post-closing to ensure a smooth transition to your new home.
What is Closing?
Closing on a house is the last step in the home-buying process before ownership transfers to you. On the closing date, you become the legal owner of the house by signing a purchase agreement contract. Signing the sales contract happens after a negotiation period where the buyer and seller set the closing date and earnest money, a good faith deposit, and changes hands to secure the deal.
Closing means that you are content with the home inspection and are ready to sign a purchase contract to purchase the home.
Get Title Insurance
Before or shortly after closing, you will need to add title insurance to your closing costs. This type of insurance covers errors in ownership records that may adversely affect you down the road. Possible errors include incorrect signatures and forgeries, flawed records, outstanding liens or lawsuits, or ownership by another party and can pose a financial risk to the buyer.
Taking out title insurance protects you from unexpected litigation or error-related financial obligations that may surface from past ownership or title issues.
What to Expect From the Title Company
A title company is a third-party entity that protects the buyer and seller during the sale of a house. Title companies are neutral parties that do research to ensure everything is in order before buyers close on a home.
You can expect the title company to verify all of your closing documents during the final step in the homebuying process. After closing, the title company processes the paperwork and distributes relevant files to the seller and buyer. They also send documents in the closing package to the mortgage lender for approval. This process must occur before the title company disburses any funds.
The title company records documents, including deeds, powers of attorney, and mortgages with the county. Once the lender has approved the closing package, the title company can pay off the seller’s mortgage or deliver the proceeds.
What You Need to Do
After getting the key to your new home, you can take post-closing actions to ensure a smooth transition to your new property. These actions include safely storing your closing documents and updating your ID and other relevant accounts with your new address.
You will also want to review your homeowners’ insurance and take care of new homeowner responsibilities like changing the locks and fixing any issues found during your home inspection.
Save Your Closing Package
Your closing package contains documents covering the sale transaction and mortgage details. Your best course of action is to obtain copies of your closing documentation and store them in a safe place in case you need to reference them in the future.
Check that your closing package includes the promissory note, closing disclosure, mortgage details, and deed. If you need copies of these documents, you can contact your real estate agent because they must keep the closing documents of all buyers and sellers who work with them.
You can also get the closing documents from the escrow officer. Keep in mind that mortgage documents and the deed are filed with the county recorder to become a public record. The county recorder’s office will give you copies upon your request.
Update Your Driver’s License and Registration
You need to communicate your change of address to the department of motor vehicles within 30 days of moving. Some states may require you to take a written exam or even a driving test if you are a new resident of that state. Act early to avoid being penalized or fined.
You will need to change your car registration address and inform your car insurer of your move. Submit a written letter with proof of your new address along with your updated registration certificate to ensure continued coverage.
Update Other Important Documents
You will need to communicate your address change to your bank, investment broker, and credit card companies so they can record your new address in their databases. Don’t forget to inform your mobile phone service provider, life insurance company, and update any bills you pay. Updating your address with the US Postal Service ensures you start receiving your mail at your new home.
Review Your Homeowner’s Insurance
Contact your homeowners’ insurance company to ensure everything is in order. Do you need your policy to cover earthquakes, floods, or other disasters? If so, speak with your agent to make sure you have the necessary coverage for your new property.
Check if you are eligible for discounts for installing smoke alarms or holding additional insurance policies with the same vendor. Many insurers offer you a better deal if you obtain your car insurance or life insurance with their company.
Act Fast if You Experience Difficulty Making Payments
Government-backed entities like Fannie Mae and Freddie Mac make it possible for homebuyers to obtain the mortgages they need. However, once people secure their mortgage, it’s not uncommon to fall on difficult times.
If you find yourself struggling to keep up with your mortgage, take action to avoid any negative consequences such as late fees from piling up. Speak with your lender about your options and seek to refinance your loan to achieve more favorable terms. If you fail to make arrangements with your lender, your credit score may take a hit. Excessively late payments can result in foreclosure.
New Homeowner Responsibilities
Moving into a new property requires you to take care of many new homeowner responsibilities. When you move into your new home, perform tasks like changing all locks, cleaning the gutter, and servicing your HVAC system. You’ll also want to give your new home a fresh coat of paint and make any aesthetic changes as soon as you move in to make the space your own.
Although you may receive offers for new homeowner services, refrain from making non-essential purchases, signing up for costly monthly services, or applying for new credit before stabilizing your budget. As a new homeowner, preparing for your first mortgage payment is important before making additional investments.
Being Prepared for Post-Closing
Knowing what to expect post-closing will make even the most inexperienced home buyer feel more at ease. Understanding the closing process and performing essential new homeowner duties will help ensure a smooth transition to your recently purchased property.
Using a realtor and title company may provide some security, but possessing knowledge of the closing process will help you eliminate most risks. Learn more about mortgages from the experts at Finance is us. The robust library of knowledge at Finance is us empowers you as a prospective homeowner to make informed choices about your mortgage.
Disclaimer: All content on this site is information of a general nature and does not address the circumstances of any particular entity or individual, nor is the information a substitute for professional financial advice and services.