What to Expect After Mortgage Closing in Michigan

Closing day is often viewed as the finish line of the home buying marathon. You sign the papers, your hand cramps up, money changes hands, and finally, you get the keys. But whether you are just starting your research, currently under contract, or sitting in your new living room surrounded by boxes, it is crucial to understand that closing is actually just the start of a new chapter.

For many homebuyers, the period immediately following the closing table is filled with questions. When is the first payment due? What is this letter about a loan transfer? How do I handle taxes?

If you are researching the process of closing on a home in Michigan, or if you have just finalized the deal, this guide covers the overlooked steps that happen after the ink dries.

 

Sorting Through the Paper Trail

Closing on a house involves one of life’s most intense paperwork marathons. Even after you leave the title company, the paper trail continues. If you are currently budgeting for mortgage closing costs, understanding what these documents represent is vital for your financial planning.

After the transaction is finalized, you will receive a specific set of documents. These are not just receipts; they are legal records of your ownership and financial obligations.

Key Documents You Need to Keep
Whether you are organizing a digital folder or a fireproof safe, ensure you have easy access to the following:

• The Deed: This is the legal proof that you own the property. In Michigan, this is recorded with the county Register of Deeds.
• Closing Disclosure (CD): This form is critical for understanding your finances. It outlines the final mortgage closing costs, your interest rate, and your monthly payments. If you are researching, studying a sample CD can help you understand where your cash to close is actually going.
• The Note: This is your promise to repay the loan. It details the terms, penalties, and interest specifics.
• Escrow Account Initial Disclosure: This breaks down how much of your monthly payment goes toward taxes and insurance.
• Warranties and Manuals: Don’t throw away the booklets for the furnace or dishwasher; you will need them for maintenance schedules.

 

The Michigan Homestead Exemption (Principal Residence Exemption)

If you are closing on a home in Michigan that you intend to occupy as your primary residence, this is arguably your most important post-closing task.

Michigan offers a Principal Residence Exemption (PRE), often referred to as the “homestead exemption.” This exemption exempts you from a portion of local school operating taxes, which can save you significant money on your property tax bill — often hundreds or thousands of dollars a year.

How to File
While the specific process can vary slightly by municipality, you typically must file an affidavit with your local city or township assessor.

• The Deadline: To qualify for the exemption for the current tax year, you generally need to file by June 1st or November 1st, depending on when you closed.
• The Risk: If you forget to file this, your taxes will be calculated at the higher “non-homestead” rate (typically used for rental properties or second homes).

Make this your number one priority the week you move in.

 

Demystifying the Escrow Account

“Escrow” is a term that confuses many first-time buyers during the research phase. Simply put, an escrow account is a forced savings account attached to your mortgage payment.

How It Works
Instead of paying your large property tax bill and homeowners insurance premium in lump sums once or twice a year, your lender collects 1/12th of those estimated costs every month along with your mortgage principal and interest. When the bills are due, the lender pays them for you.

For those calculating mortgage closing costs, you will notice you often have to “pre-load” this account at closing with a few months’ worth of payments to ensure there is a buffer.

The Annual Analysis
Homeowners are often surprised by a change in their monthly payment a year after closing. This is usually due to an escrow analysis.

1. Taxes/Insurance Increase: If your local property taxes or insurance premiums go up (which they often do), your monthly payment must increase to cover the difference.
2. Shortage: If the account ran low because costs were higher than expected, your lender will adjust your payment to cover the shortage.
3. Overage: If you paid too much, you will receive a refund check.

Pro-Tip for Researchers: When budgeting for a home, assume your monthly payment will rise slightly over time due to tax and insurance increases, even if you have a fixed-rate mortgage.

 

Setting Up Your Mortgage Payments

Once the dust settles, you need to actually start paying for the house. The timeline for this surprises many new buyers.

The Skip a Month Phenomenon
Mortgage interest is paid in arrears (backwards). This means when you make a payment on August 1st, you are paying the interest that accrued in July.

• Example: If you close on June 15th, you prepaid the interest for the rest of June at the closing table (part of your mortgage closing costs). Your mortgage clock starts ticking July 1st. That interest for July is collected in your August 1st payment.
• The Result: You generally skip the first calendar month after closing. Use this “break” to replenish your savings or buy essential furniture.

Managing Autopay
Your lender or servicer will send a welcome packet with instructions on setting up an online account. We highly recommend setting up autopay to avoid accidental missed payments, which can severely damage your credit score. Note that some systems require you to make the first payment manually before automation kicks in.

 

Don’t Panic: Your Loan Might Be Transferred

If you are researching lenders, you might read reviews about loans being “sold.” This is a standard industry practice and nothing to worry about.

It is very common for your original lender to sell the “servicing rights” of your loan to another institution. This means you will send your check to a different company, but the terms of your loan—your interest rate, balance, and term length—cannot change.

What to Watch for:

• You will receive a “goodbye” letter from your old servicer and a “hello” letter from the new one.
• There is a 60-day grace period where you cannot be charged a late fee if you accidentally send payment to the old servicer.
• Scam Alert: Always verify the new servicer’s information independently before entering your bank details online.

 

Budgeting for Real-Life Homeownership

If you are currently in the house-hunting phase, your budget likely focuses on the down payment and the monthly mortgage note. However, successful homeownership in Michigan requires budgeting for the things that break, leak, or freeze.

The “Oh No” Fund
Even a turnkey home has maintenance needs. In Michigan, you have specific seasonal costs:

• Winter: Snow removal service, salt, furnace filters, and heating bill spikes.
• Spring/Summer: Lawn care, gutter cleaning, and AC maintenance.

Start an emergency repair fund immediately. Aim to set aside 1% to 3% of the home’s value annually for maintenance. If you bought a home for $300,000, try to save $3,000 a year (or $250 a month) specifically for house repairs.

Utility Setup
If you are moving locally, you can often transfer services. If you are moving to a new area, create a checklist for:

• Gas & Electric
• Water & Sewer
• Trash & Recycling
• Internet & Cable

Treadstone Client Perk: Clients who work with Treadstone receive an offer before closing with complimentary software designed to help set up all utilities at no cost, streamlining this stressful part of the move.

 

Treadstone Is Here for the Long Haul

Whether you are just starting to Google “how to buy a house” or you have been in your home for five years, you need a partner who sticks around.

At Treadstone, we don’t disappear after the mortgage closing costs are paid. We are your mortgage team for life. Questions about your escrow shortage? confused by a tax bill? Thinking about refinancing for a renovation? We are always just a phone call away.

Buying a home is a journey, not a transaction. If you are ready to start that journey, or if you just need clarification on the road ahead, let’s connect.

 

FAQs

What is the very first step after closing on a house?
Prioritize securing your documents and changing the locks. Shortly after, you should file your Homestead Exemption (in Michigan) and ensure all utilities are transferred into your name to avoid service interruptions.

How much are mortgage closing costs usually?
Closing costs typically range between 2% and 5% of the loan amount. These include appraisal fees, title insurance, origination fees, and pre-paid items like taxes and insurance.

When is my first mortgage payment due?
Your first payment is usually due the first day of the second month after closing. If you close in September, your first payment is typically due November 1st.

Why did my mortgage payment go up after the first year?
This is likely due to an escrow adjustment. If your property taxes or homeowners insurance premiums increased, your lender must increase your monthly payment to cover the higher bills and any shortage in your escrow account.