You’ve Closed Your Mortgage, Now What?
Congratulations if you’ve closed your home mortgage refinance or your original mortgage. Hopefully you’ve been able to get such a low rate and great terms that you will not need a site like this for a while. Yet recent history suggests that even when you think mortgage rates cannot drop again, they suddenly do. And what if either time passes or home prices increase and you then want to pull equity out to pay for something that would otherwise require you to pay a higher rate. Perhaps you are never quite through contemplating a mortgage refinance.
Assuming you took our advice and got a mortgage refinance through a bank that does not penalize people for refinancing soon after closing on another refinance. If you did not do so before, check to see if there are any prohibitions – usually 30, 60, or 90 days – from refinancing after closing. Here is what you should be paying attention to either right after you close the refi, or that number of days out:
- Did mortgage interest rates drop, and if so, how far? There are so many rules of thumb about how far rates have to drop to warrant another refinance that we have trouble choosing one here. For a less expensive home you may need to wait until you can get a half-point drop in rates to see an appreciable difference, yet for a home with higher payments a quarter point drop may be enough. As always, you need to factor in closing costs as well, as covered elsewhere here.
- Are interest rates the same but you are considering a home improvement project or other outlay of money (e.g. college or private school costs) for which you would otherwise need to take out a loan with much higher interest? In these cases doing a cash out mortgage refinance may be a good option – though keep in mind that the rates on cash our refinances may be higher than the published rates.
- Don’t let your credit scores drop. It may feel like no one will be running your credit scores for a while now. Don’t be fooled. You never know when you will want to make a purchase or an investment, or perhaps when rates will fall, and you will need solid credit scores. Remember that once your credit scores fall it’s hard to bring them back up. Keep them high and even make a list of how to raise them even higher.
- Protect your investment in your home. Remember that if you ever want to refinance, and of course if you ever want to move and sell your home, you will have an appraiser and perhaps an inspector come through. Make sure you are truly taking care of your home well, and keeping up with all the routine maintenance you need to. Down the line when it is time to sell or refinance your mortgage it may be too late to catch up.
- Pay your mortgage payments on time. Okay, so this one may be obvious but the last thing a new mortgage company with whom you want to refinance wants to see is a history of late mortgage payments. Doing automatic drafts may be prudent, and having them planned to arrive a few days prior to the last possible day is a good idea in case anything goes wrong. Yes, this one is obvious but still many people miss deadlines.
These are the main “to dos” after you close on your mortgage or mortgage refinance. In your own unique situation there may be other steps you need to take as well, but these are the ones that pertain to most people. Remember, most homeowners are not finished refinancing but merely between refinances, so you need to be prepared for the next one.
Best of luck, and please feel free to share your own experience and advice below.