You just closed on your house, now what?
It’s important to first understand that the closing process doesn’t happen in a day. In fact, it takes an average of 48 days to close on a home, and it can drag on longer if there are delays. What you do during and after closing can make your first year as a homeowner a headache or even jeopardize your home sale. It's important to avoid certain actions after closing on a house because they could have a negative impact on the transaction and your ability to finalize the the details of the mortgage loan.
To navigate this crucial time, avoid these seven mistakes to make closing a breeze.
1. Don’t do anything to compromise your credit score
Ashwin Dayal, General Manager of Orchard Mortgage, identifies changes in credit as one of the most common delays to the closing process.
If you applied for your mortgage with an ideal credit score but have a bad credit score at the time of underwriting, you may lose out on your mortgage entirely. Avoid this scenario by guarding your credit score until your loan officially closes.
Common reasons for credit scores to drop:
- Applying for a new line of credit or credit card
- Charging big ticket items
- Reducing your credit limit
- Missing a payment
- Paying off a loan (Although counterintuitive closing out a line of credit can actually make your score drop because it shortens your line of credit history)
- Closing a credit card
2. Don’t change jobs
Another one of the most common reasons for a closing delay is a change in your income or assets.
Your lender will review your financial information to ensure that you are qualified for your home loan during the underwriting process. If you change your job or lose your income, you might also lose your eligibility for a mortgage.
Dayal says you can avoid delays or denials by being prepared with the following information for your lender:
| Income source | Required documents |
|---|---|
| Traditional employer | W2s and pay stubs |
| Freelance or self-employed | 1099s |
| Business or rental property | Tax and business returns |
| Retired | Social security award letter, asset and pension statements |
And make sure to notify your employer that you’re applying for a home loan. He says, “Lenders are required to get a verification from your employer that you are still employed before your loan closes. They can do this up to 10 days before closing. Make sure to let your employer know that they should be expecting this call from the lender and to answer — if your employer delays, your lender cannot fund your loan!”
3. Don’t charge any big purchases
This includes making big charges on things for your new home (like that perfect sectional or a down payment on that pool you want to install). These charges may affect your debt-to-income ratio and credit score enough to disqualify you from your mortgage.
Once your mortgage is closed and you own your new home, you can go ahead and do any of the above. Just wait until your mortgage is funded to avoid potentially losing out on the house.
4. Don’t forget to change the locks
When you’ve finally closed, you’ll be handed the keys to your home on closing day, but that doesn’t mean that you have every key that unlocks your house (or your mailbox, or your shed, or any other lock that came with your property). Spare keys could still be circulating, which means your home may be vulnerable to break-in if you don’t take action.
To ensure that your home and everything in it is protected, change your locks right away. Hiring a professional locksmith will cost you between $80 to $200, but you can always DIY this task by purchasing and installing locks from your local hardware store.
5. Don’t get carried away with renovations
Of course, you will want to put your personal touch on your home after closing, but you may want to hold off on major renovations. Home improvement projects can run up bills fast, which can put strain on your lines of credit and savings. Take a look at some of the most common (and costly) home renovations below:
| Common renovation | Average cost |
|---|---|
| Kitchen remodel | ~$20,000 |
| Bathroom remodel | ~$9,000 |
| Deck addition | ~$7,000 |
| Roof install | ~$6,500 |
As you get to know your new home, your renovation priorities might change — maybe you’ll find that the deck you wanted to add would have taken up a chunk of your lawn that your kids love to play on.
That isn’t to say you can’t change anything. Painting your house’s interior is a great way to breathe new life into your home without stretching your lines of credit. The process can take 6 to 10 hours and cost under $1,000 per room.
6. Don’t forget to tie up loose ends
Many things in life are tied to your address — registrations and licenses, bills and statements, and other services. When you close on a house, you’ll also have to update these accounts.
Don’t wait until the end of move-in day to find out the water for your long-awaited shower hasn’t been turned on. Get a jump on the following right away:
- Change your driver's license and voter registration
- Transfer or cancel utilities
- Update credit card and banking information
- Set up autopay for your mortgage
- Forward mail to your new address
- Manage subscriptions (like newspapers, periodicals, or anything else delivered directly to your home)
7. Don’t refinance (at least right away)
Refinancing can shorten the pathway to debt-free ownership by reducing monthly payments, unlocking equity (like with a cash-out refinance), or removing private mortgage insurance. Most loans are eligible to refinance immediately or after a short six to 12-month waiting period. But just because you’re eligible to refinance doesn’t mean you should.
The process of replacing your mortgage with a new one comes with fees, such as:
- Closing costs: These fees can amount to 2% to 6% of the total value of the loan.
- Origination fee: This charge typically costs 0.5% to 1% of the total loan amount.
- Private mortgage insurance: If your home has declined in value and you do not have enough equity to meet the standard 20% down payment on your new mortgage, you may have to add on private mortgage insurance — adding an additional cost to your mortgage.
Depending on your situation, cutting a fraction of a percentage point in interest rates might not cover these additional costs. However, you can take advantage of future rate-drops when you buy a house with Orchard and use Orchard Mortgage. We offer no-fee refinancing for the lifetime of your loan — get started here.
Things to do after closing
You know what not to do after closing on a house, and here are a few things you can do to make the process even easier.
Keep track of paperwork
You never know when you’ll want to double-check your interest rate or homeowner’s insurance policy. Instead of shoving these documents in a drawer and forgetting about them, put them in a reliable and safe place so you can easily reference them.
Better yet, scan or upload these documents into a protected file on the cloud so you can reference them with ease from anywhere in the world.
Greet your new neighbors
Joining a new community can be intimidating. Introducing yourself to your new neighbors can make you feel at home and you might make a few new friends along the way. If you’re feeling shy, remember that you don’t need to invite everyone over for a pool party — a simple greeting is more than enough.
Make a home maintenance plan
Keeping your home in good condition is just one way to protect your home's value — and it’s an important one. When it comes time to sell, having a home in good condition can make or break your home sale — 80% of homebuyers prefer a move-in-ready home to a fixer-upper.
Stay ahead of home maintenance by making it a regular part of your routine and budgeting for it. Experts generally recommend setting aside 1% to 4% of your home’s value annually for your maintenance fund.
→ Find out how much you lose selling your house as-is
Stay in touch with your real estate agent
You already know that your real estate agent is a valuable resource before and during your home sale process — they're also a valuable resource after it. As a local expert, they can advise you on the best projects to build equity in your home, put you in touch with trusted contractors, and help you when you’re ready to move on to a new home.
Want to work with local experts? Orchard can help.
FAQs
Here are some more answers to your questions about what not to do after closing.
Q: What is the significance of closing on a house?
Closing on a house is the final step in the homebuying process where the buyer and seller sign all the necessary documents and complete the transaction. After closing, the buyer takes possession of the property and becomes the legal owner. It's imperative to avoid doing certain things after closing on a house because these actions could delay your transaction
Q: Can a loan be denied after closing?
It's quite possible for a mortgage loan to be denied after closing in some circ*mstances. For example, if there is a major change in the borrower's financial situation or credit score, the lender may be able to withdraw the loan offer before the transaction is complete. That's why it's important to not to do certain things after closing, to ensure you get a mortgage with the agreed upon terms.
Q: Can you buy furniture after closing?
Yes, you can buy furniture after closing, but it's important to do so responsibly and within your means. That means paying in cash when you're able, since using a credit card could mean a change to your credit score or DTI. Above all, make sure your furniture purchases within your budget and won't put a strain on your finances.
Q: How long should I wait before making major purchases or changes after closing?
It's generally recommended to wait at least a few months after closing before making any major purchases or changes to the home. This allows you time to settle into the property and assess your financial situation. It's also important to keep your debt-to-income ratio in check and avoid taking on too much debt too quickly.
