Advice for a New Mortgage

Keep on top of your monthly mortgage payments and stay informed of market trends.

Keep on top of your monthly mortgage payments and stay informed of market trends.

The dust has barely settled off your moving boxes, and already your first mortgage payment is due. You're going to be making those payments for many years to come, and soon your payments will become routine. Maintain a good relationship with your lender, and your road to home ownership should be smooth.

Make Timely Payments

Pay your bills on time! Your mortgage will be your largest monthly bill, and you do not want to jeopardize your credit score, or incur costly late fees, by not paying the bill when due. Some lenders offer a short grace period after the due date, but others slap on a fee the very next day. The easiest way to ensure that you don't forget to pay is to set up an automatic bill payment. Usually you can set up an electronic funds transfer (EFT) directly from your checking account, but make sure you double check that the payments actually go through each month. You'll also save on stamps this way, and avoid the anxiety of not knowing if your mail arrived.

Check on Escrow Payments

Property taxes and homeowner's insurance are typically escrowed with your mortgage. The way this works is that each month, along with your regular mortgage payment, you also give the lender a payment towards your taxes and insurance. In turn, the lender pays the tax and insurance directly. It's the way the lender protects itself against the possibility of you defaulting on payments related to your house. This doesn't mean you should rest easy about these payments. Just like you might accidentally miss a payment, the bank might also slip up once in a while. If they miss a payment, you're on the hook for any penalties. So double check with your city or county, and with your insurer, that payments were made on time. Otherwise, give your lender a nudge to make that payment.

Pay a Little Extra

If you can afford it, you might want to consider paying down a little extra from time to time. It's a great way to build equity and to reduce your total costs over the life of the loan. You can set up regular, extra payments each month, or send in an occasional lump sum. If you're doing well with other investments, you might not want to put extra money towards a low-interest mortgage, but if you want to hasten your goal of living debt-free, this is one way to do it. Make sure your mortgage does not have any prepayment penalties.

Keep Informed About Mortgage Trends

Even though you just started making payments, it never hurts to keep abreast of mortgage trends. It won't happen right away, but if rates eventually go down, you might want to refinance, or modify your loan, down the line. If you have a variable rate mortgage and rates go down, you might want to consider refinancing to a fixed rate loan.

About the Author

Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.

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