Selling your home is a significant milestone that brings a mix of relief, excitement, and a touch of nostalgia. While closing day marks the end of one chapter, it’s important to stay proactive with the next steps. Here’s a comprehensive guide on what to do after you’ve sold your home:
Step 1: Confirm Closing Pay-Offs
Once the sale is complete, double-check that all funds have been transferred as agreed. Ensure that your mortgage is paid off and that any remaining proceeds are safely deposited into your account. During the closing process, various financial obligations tied to the property are typically settled. Confirming these pay-offs is crucial, and here is a list of common items and who to contact to verify payment:
- Mortgage Pay-Offs: The outstanding balance on your mortgage is settled at closing. Contact your mortgage lender to confirm that the loan has been fully paid and that you receive a confirmation letter.
- Outstanding Late Property Taxes: Any unpaid property taxes are usually cleared during the closing process. Reach out to your local tax office or municipal treasury department to verify that the taxes have been settled.
- Liens: Liens placed on your property due to unpaid debts must be paid at closing. Contact the lienholder or the title company handling the closing to ensure the lien has been discharged.
- Court Judgments: If there were any court judgments against your property, they would need to be satisfied during closing. Confirm with your attorney or the court that the judgment has been paid and cleared from public records.
You can review the closing statement provided at settlement and check with these relevant parties to ensure all payments were completed as outlined. Keep records of these confirmations for your files.
Step 2: Cancel Homeowner’s Insurance
Contact your insurance provider to cancel or adjust your homeowner’s insurance. Make sure the cancellation only occurs after the closing to avoid any lapses in coverage.
If you are moving to a new home, it may be necessary to either obtain or update your insurance. Assessing various plans involves reviewing coverage options, costs, and provider reputations.
Look for policies that adequately protect against potential risks and provide appropriate liability coverage. Consulting with an insurance professional can help you navigate this process efficiently.
For assistance with insurance needs, reach out to our colleague John Schaeffer at Hanson & Ryan, Inc., located at 87 Lackawanna Ave, Totowa, NJ 07512. You can contact him at (973) 774-5987 or via email at jschaeffer@hanson-ryan.com.
Step 3: Inform Utility Companies
Notify utility providers of your move to prevent being charged for services post-sale. Transfer or close accounts for water, electricity, gas, internet, and other services as necessary.
- Electricity
- Gas
- Water
- Internet and cable
- Waste management/trash collection
- Sewer services
- Phone (landline, if applicable)
- Home security systems
- Any other local or specialized utility services
Step 4: Update Your Address
Submit a change-of-address request with the postal service to ensure your mail is forwarded to your new location. Update your address for important accounts, such as banks, credit cards, and subscriptions. Here’s a thorough list of types of accounts to update your address for:
- Financial Institutions: Update your address with banks, credit unions, and any investment or retirement accounts to ensure you receive important statements and notices.
- Credit Card Companies: Notify all credit card providers to prevent disruption in billing and services.
- Insurance Providers: Update your address for homeowner’s, auto, health, and life insurance policies to maintain proper communication.
- Government Agencies: Inform the DMV, Social Security Administration, and other relevant government offices of your change of address.
- Employers and Payroll: Ensure your employer’s HR department has your new address for payroll and tax documentation.
- Subscription Services: Update your information with magazines, streaming services, and monthly box subscriptions.
- Utilities and Services: Notify service providers for utilities, internet, phone, and cable.
- Medical Providers: Let your doctors, dentists, and other medical professionals know of your new address.
- Schools and Educational Institutions: If applicable, inform schools or colleges of your change of address.
- Online Retailers: Update your address on frequently used e-commerce sites to avoid delivery issues.
- Memberships and Clubs: Notify gyms, libraries, and any social or professional clubs you are a member of.
- Friends and Family: Make sure close contacts are aware of your updated address to stay in touch.
Step 5: Keep a Copy of Your Closing Documents
Retain copies of all documents related to the sale, including the settlement statement and deed transfer paperwork. These can be helpful for future tax filings or potential inquiries.
To safely store these documents electronically, use secure, encrypted cloud storage services or digital filing systems that offer two-factor authentication. Ensure you back up these files in multiple locations, such as an external hard drive or another cloud service, to prevent data loss. Label and organize files clearly so they can be easily accessed when needed, and avoid sharing sensitive information over unsecured networks or with unauthorized individuals.
Step 6: Prepare for Capital Gains Tax
If you’ve made a significant profit from the sale, consult with a tax professional to understand any potential capital gains taxes you might owe and how to prepare for them effectively. Your tax obligations can depend on various factors, such as the length of time you owned the property, your filing status, and any exclusions or deductions you may qualify for under current tax laws.
The primary residence capital gains exclusion is a significant benefit for homeowners looking to sell their homes. Under this tax rule, individuals can exclude up to $250,000 of capital gains from their income, while married couples filing jointly can exclude up to $500,000, provided certain conditions are met. To qualify, the home must have been the primary residence for at least two of the five years preceding the sale. This exclusion helps homeowners avoid substantial tax obligations on profits gained from the sale, making it a valuable advantage when managing the financial aspects of selling a home. It is crucial to consult a tax professional to ensure eligibility and proper application of this exclusion.
Step 7: Notify Family, Friends, and Contacts of Address Change
Let friends, family, and key contacts know you’ve moved.
Failing to do so can lead to several consequences. For instance, important mail might continue to be sent to your old address, causing delays in receiving bills, family information and updates, bank statements, or legal documents.
Additionally, if service providers like lawn care or cleaning crews are not notified, they may continue to provide services at your old property, resulting in unnecessary charges or confusion. Make sure to inform any services you use that their work is no longer needed to avoid these potential issues.
Step 8: Estate Planning (Will, Power of Attorney, Trust)
Estate planning is critical after selling your home and coming into new assets, as it helps ensure that your newfound wealth is protected and distributed according to your wishes. This process involves updating or creating essential estate planning documents, including:
- Wills: Outline who inherits your property and assets upon your passing, ensuring that your wishes are clearly communicated and legally enforceable.
- Trusts: Help manage assets efficiently and provide a way to avoid probate, allowing for a smoother and often quicker transfer of wealth to beneficiaries.
- Durable Powers of Attorney: Designate someone to handle your financial or legal matters if you become incapacitated, ensuring that your affairs are managed according to your preferences.
- Healthcare Directives: Specify your medical treatment preferences and appoint a representative to make health-related decisions on your behalf if you are unable to do so.
- Beneficiary Designations: Review and update beneficiaries on life insurance policies, retirement accounts, and other financial instruments to reflect any changes in your estate plan.
By creating or updating these documents, you secure not only the protection of your assets but also the well-being of your loved ones. The Law Firm of Earl P. White can assist with your estate planning needs, ensuring all documents are tailored to your circumstances and provide peace of mind.
Reach out to our firm for professional guidance on protecting your assets and securing your legacy. Contact us at (201) 472-0336, email us at contact@earlwhite.law, or fill out our simple form at https://www.earlwhite.law/contact/.
Step 9: Cancel Automated Payments
If you had automatic payments set up for your mortgage or home-related bills, make sure they are canceled to prevent unnecessary deductions.
Step 10: Celebrate Your Sale
After all the paperwork and logistics are settled, take a moment to celebrate this milestone. Whether it’s with a night out, a small gathering, or simply some time to relax, appreciate the completion of your home-selling journey.
Selling your home can be an emotional and complex process. By taking these steps, you’ll ensure a smooth transition and set the stage for your next adventure.