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Step 23: After Closing: Your First Year as a Homeowner

Make your first payment, watch for a servicing transfer, file for tax exemptions and track your equity.

Congratulations, you own a home. A few things in the first months will save you money and stress.

Your first mortgage payment

Your first mortgage payment is usually due on the first day of the second month after closing. Close on June 15, and the first payment is due August 1. That's because mortgage interest is paid in arrears, and you prepaid interest through the end of June at closing.

Who you pay

Your loan is managed by a mortgage servicer, which may not be the lender you closed with. Loans are often sold, and the servicing can be transferred. In a servicing transfer:

  • Both the old and new servicer must notify you, generally at least 15 days before the change
  • There's a 60-day grace period during which a payment sent to the old servicer can't be treated as late
  • Your rate, term and balance don't change

Be wary of any payment-change notice that doesn't come from your servicer. Call the number on your statement to confirm.

Escrow account

If you have an escrow account, your servicer pays property taxes and insurance. Once a year, it runs an escrow analysis. If taxes or insurance went up, your payment rises; if there's a surplus over the allowed cushion, you get a refund.

Money-saving steps

  • File for a homestead exemption, if your state offers one, to lower property taxes on your primary home.
  • Remove PMI when you reach 20% equity. See PMI removal.
  • Track your home equity as you pay down the loan and the value changes.
  • Watch rates. If rates fall meaningfully, a refinance can lower your payment. Use Rate Watch to see when it makes sense.
  • Keep records of improvements; they can reduce taxable gain when you sell.

Using your equity

Later, you can borrow against equity with a cash-out refinance or a HELOC for renovations or other goals. Unbeatable shows refinance options for homes you own.

You've reached the end of the guide. Browse the glossary for any term, or start with your budget on your next purchase.

Your next move, by loan program

  • Conventional: Once your balance reaches 80% of the original value, you can ask to remove PMI. It ends automatically at 78%. Track my rate
  • FHA: FHA mortgage insurance usually stays for the life of the loan with less than 10% down. Refinancing to conventional later can remove it. Watch refinance rates
  • VA: If rates drop, a VA streamline refinance (IRRRL) can lower your rate with little paperwork and usually no appraisal. Watch refinance rates
  • USDA: USDA offers streamlined refinances for existing USDA borrowers when rates fall. Watch refinance rates
  • Jumbo: Jumbo borrowers often benefit most from small rate drops because of the larger balance. Watch refinance rates
  • Investor: For rentals, track DSCR and equity. A cash-out refinance can fund your next purchase. Explore DSCR loans