Close on the house, check. Move in all your furniture, check. Host a housewarming party, check. These are the things most home buyers plan for in the immediate days, weeks and months after purchasing a new house. Dealing with a new mortgage company, digging into property tax assessments and meeting a home insurance agent are typically not high on a recent buyer’s priority list — but they should be. Soon after the dust settles on a home sale, a few unexpected things can happen. As a recent buyer, you should be aware of what’s to come so that you’re not caught off guard.
1. Your Mortgage Will Likely Be Sold
After all the time you spent during the preliminary buying process looking at rates, analyzing loan programs and comparing lenders, it may come as a shock when your mortgage is sold. Rest assured, it’s a very common practice. Mortgages are sold everyday.
Here’s why: Lenders make money by selling your loan to a secondary investor. Your loan originator gets paid a commission for each mortgage that gets placed, but that doesn’t necessarily mean he or she will service the loan throughout its lifetime. Instead, loans get grouped together and sold off in bulk to another investing company such as Freddie Mac of Fannie Mae. By selling off the loan, this frees up the lending company’s cash, allowing them to secure new loans for other buyers.
By selling off the loan, this frees up the lending company’s cash, allowing them to secure new loans for other buyers.
If you worked with a big box bank, it’s highly likely that your loan will be sold. If this is the case, you should receive notification at least 15 days before the transfer from both your original loan owner and the new owner. During that time, you will want to contact both institutions to confirm the transfer is legitimate and not a scam.
Once the transfer has occurred, you will receive instructions on how to make payments moving forward. The main details of your mortgage should remain the same, but how you pay and who to make the payment to may be different. For example, if you have a 30-year fixed mortgage, your rate and monthly payment should remain constant despite a new company holding the note.
2. Your Property Taxes May Change
When purchasing a home, it’s important to budget for property taxes as part of your monthly housing expense. However, try not to get stuck on the exact number as it is subject to change. Property taxes can fluctuate from year to year and several factors can cause your home’s assessment to increase (and sometimes decrease).
Depending on where you live, the sale of a home may trigger a notice from the tax assessor’s office. Many counties periodically reevaluate properties by sending out an appraiser to determine the current assessed value. These evaluations help to ensure that the tax burden is distributed fairly amongst homeowners in the community. The appraiser reviews home sales and takes into account the economy and local housing market.
If you receive a notification about a property inspection, it’s best to follow up with the assessor’s department for clarification.
To most accurately assign a value to your home, the appraiser may want to schedule a property tour. You won’t be forced to let the appraiser into your home. However, by opting out of the property tour you may forfeit the right to contest the assigned value should you disagree with it. Without seeing the inside of your home, the appraiser will analyze its general attributes like location, size and type, but they may make some incorrect assumptions. If you receive a notification about a property inspection, it’s best to follow up with the assessor’s department for clarification.
As a homeowner, it’s important to keep tabs on your property record to ensure the attributes are listed accurately. For instance, if your property is assessed as a four bedroom, when there’s only three, you may be paying more than you should. Most communities have a way to appeal the property assessment in an effort to lower your rate.
3. Your Insurance Company Wants a Visit
Nothing quite says welcome to homeownership like a visit from your home insurance agent. Securing a homeowners insurance binder is a prerequisite to getting a loan commitment on a mortgaged property. While the insurance company likely asked several questions and had you complete a form about the property during the loan process, it’s rare for a representative to step foot on the property until you have actually closed.
Don’t be surprised if your agent wants to stop by to scope out your newly acquired asset. During the visual inspection, the agent may discover things that need to be addressed for the company to continue coverage. Insurance companies do not like to see safety issues that could be cause for concern. For example, something as simple as an overhanging tree branch or shoddy electric may be called to your attention. If your insurance agent finds issues at the property he or she may ask that you fix them. Alternatively you can discuss a new policy that covers the problems that arose.