Congratulations on making the big move! As you transition to your new space, it’s important that the transitions in your finances are as seamless as possible. To help, here are three steps you can take to keep your banking on track as you settle into your new home.
Understand your mortgage. Your new living situation has likely brought a new mortgage, and your first payment may not be due for some time, depending on the date of your closing. This may feel like a free month of living, but it’s good to know just what that means over time.
Your mortgage consists of two parts: The interest and principal. The interest is paid 30 days in arrears, which means it goes toward what was owed in the past. For example, a March mortgage payment would include interest for the month of February. Payment toward your principal on the other hand is paid in advance, just like a rent payment. In other words, the principal portion of your March payment due March 1 would go toward your principal for the month of March.
The amounts are amortized over the length of the mortgage. Also, depending on your closing date, it is likely a portion of your interest charges for the month were charged to you at that time. Based on this, while it may seem like you’re getting a month free, it all works out in the end. But knowing what you’re paying for and when can give you greater understanding about just what you’re financing.
This will also give you better insights as to when and how you could refinance. If you didn’t get a competitive interest rate, or interest rates have dropped since you closed, you may want to refinance. This could be done with your current lender often after 120 or 180 days, although another lender may have opportunities to refinance sooner. It’s important to understand any penalties and speak to a mortgage expert before making any moves.
Stick with your bank – or not. Depending on where you moved and the features of your current bank, you may or may not have to switch. Many banks have multiple branches or have mobile and remote options that make going into a physical facility unnecessary, and you’ll be fine staying where you are. However, a move to a new home in a new place is also the ideal time to assess your bank and see if you’re truly satisfied.
These are some reasons for wanting to make a switch:
- Poor customer service. Does your bank offer convenient customer service hours? Are interactions positive? Are they charging you more for face-to-face teller time?
- Lack of services and features. Do you have the branch amenities you need such as convenient ATMs and in-house services? Does your bank have online and mobile services, such as the ability to access accounts, make deposits, or transfer funds?
- Loyalty. Do you still feel valued? Many banks provide incentives and stellar customer service for new clients, but give their long-time clients the back seat. How does your bank treat you?
Assess your accounts. A third move to make at this time is to review all your accounts. Beyond your mortgage, do you have other loans? If your move involved a marriage or divorce, whose names are on the accounts, and does anything need to be updated? This transition marks a good time to also assess your interest rates. Are you paying too much for your loans? Or are you not generating enough on your savings? If you could be saving more – or earning more – every month, it may be worth refinancing or switching institutions.
It’s also a good time to evaluate the fees on your accounts. Most banks carry fees that can be waived if you keep your account balance above a certain amount. However, banks often charge unnecessary fees that can quickly add up, such as maintenance fees, paper statement fees, or human teller fees. Take a look at your statement and see what they’re charging you.
A new move is an exciting event, and as a new homeowner, you want everything about the transition to go off without a hitch. Making sure you make the right moves in your finances and banking relationships can help. For more information about products and services that can streamline your life and make your money do more, contact us.
