What Happens After Closing on a Refinance?
Just refinanced? Learn what comes next. This guide demystifies the process of transitioning to your new loan, from initial steps to long-term management.
A mortgage refinance culminates in the closing process, where final documents are signed. This guide details what to expect and actions to take immediately following closing, as you transition to your new mortgage.
Initial Steps and Waiting Period
After signing refinance documents, a waiting period begins, including the federally mandated Right of Rescission. Established by the Truth in Lending Act (TILA), this protection grants borrowers three business days to cancel certain non-purchase money refinances on a primary residence without penalty. Sundays and federal public holidays do not count toward this period.
Loan funds cannot be disbursed until this rescission period expires. For example, if you closed on a Monday (no holidays), the period ends Thursday midnight, and funds disburse Friday. If you choose to rescind, notify the lender in writing before the deadline.
Your first new mortgage payment is generally due on the first day of the month, about one month after closing. Payments are made “in arrears,” covering interest accrued during the previous month. For instance, if you close in mid-August, your first payment is likely due October 1st, covering September interest. Any interest from closing through month-end is typically collected as prepaid interest at closing.
Initial payment instructions vary; some lenders require the first payment directly to them before loan transfer to a servicer. You will receive clear guidance on where and how to make this payment. Confirm these details to avoid missed payments, which could negatively impact your credit.
Understanding Your New Loan Details
Your refinanced mortgage payment typically consists of four parts: principal, interest, property taxes, and homeowners insurance (PITI). The new payment breakdown reflects your new interest rate and loan term, potentially lowering your monthly obligation or accelerating payoff.
Your escrow account, holding funds for property taxes and homeowners insurance, will adjust. Your old escrow account generally closes, and any surplus funds are refunded within weeks to a couple of months. A new escrow account is established and funded at closing with your new lender, requiring an upfront deposit for future tax and insurance payments.
You will receive new monthly mortgage statements from your loan servicer, typically within weeks of closing. These detail your new loan number, payment amount, due date, and payment breakdown (principal, interest, escrow). Review these statements for accuracy and to familiarize yourself with the new account information.
The refinance will appear on your credit report. Your old mortgage will be marked as paid or closed, and the new mortgage will appear as a new account. While hard inquiries from the application can temporarily lower your credit score, this impact is usually minimal and short-lived, often recovering within months. Timely payments on your new loan will positively contribute to your credit history.
Receiving and Organizing Your Documents
After refinance closing, you will receive several important legal and financial documents. These include the recorded Deed of Trust or Mortgage (securing the loan), the Promissory Note (your promise to repay), the final Closing Disclosure (summary of terms, costs, transactions), and Truth-in-Lending disclosures (APR and payment schedule).
The timeline for receiving these documents varies. While you get copies at closing, the recorded Deed of Trust or Mortgage, filed with the local county recorder’s office, may take weeks or months to be returned. This delay is normal as the county processes the recording.
Establish a secure system for storing these vital documents. Options include a fireproof home safe, a bank safe deposit box, or secure digital copies in cloud services or external drives. Maintain both physical and digital copies for redundancy and easy access. Organize them systematically, by date or document type, to simplify future retrieval for tax purposes, home sales, or other financial needs.
Managing Your New Mortgage
Managing your refinanced mortgage involves understanding your relationship with the loan servicer. The servicer collects monthly payments, manages your escrow account, and handles loan communications. Lenders often sell servicing rights, so you might pay a different company than the originator. You will receive notices from both old and new servicers (e.g., “Goodbye Letter,” “Welcome Letter”) detailing the transfer and new payment instructions.
Identify your new loan servicer and establish an account, often via an online portal. This access allows you to manage payments, view statements, and monitor activity. Various payment methods are available, including online payments, auto-pay, mail, or phone. If you had auto-pay, update it with the new servicer to ensure correct, timely payments.
Regularly monitor your mortgage account to ensure correct payment application and review escrow analysis statements. These annual analyses assess property tax and insurance costs, adjusting monthly escrow contributions as needed. For questions about payment, escrow, or year-end statements like Form 1098, your loan servicer is the primary contact.