The time of year is often a time for decluttering and organizing the home for a fresh start. As you sort through your file cabinet and see how much room all your mortgage documents take up, you may wonder how long you need to hold on to all that paperwork. Here’s what you need to know before you feed it to the shredder.
Why You Should Keep Your Home Loan Documents
Even after a home purchase is finalized, several issues might arise that would require your mortgage documents to resolve. Tax discrepancies with the IRS, undisclosed property problems, payment disputes with the lender or your real estate agent, homeowners’ insurance claims challenges. These are a few situations that could pop up in the months or years after you buy your home. Below are the types of mortgage records and how long you should keep them.
Deed
A deed is the proof that you have ownership of the home, and it is signed by you and the seller. This should be kept as long as you own the property. The deed will be recorded in land records after you’ve paid off your mortgage, but even then, tangible proof that you own the place may be safer.
Mortgage and Promissory Note
This is your contract to pay back your mortgage loan and should be kept handy the entire time you own the property as well. It is important to have a record of the original agreement and terms to prove you fulfilled your end of the bargain.
Closing Disclosure
This piece of paper documents the points and fees you paid at closing to the lender and any third parties. These can sometimes be deducted from your income taxes, and you’ll need the statement as verification. If you do not claim any deductions, you can toss this one after a year from the home sale.
Seller Disclosures
Unfortunately some home problems are either not disclosed or unknown until you move into the house. The disclosures document will provide proof to your homeowners insurance that something was not revealed before you bought the home. You should hold on to this for several years until you feel like you know your home and all its systems well.
Home Inspection Report
This is the thorough pre-sale assessment of your property and its systems. You can get rid of this after three years, but you may want to hold on to it longer to remember things like the age of the roof and HVAC systems and when they’ll need to be replaced.
Home Warranty
This usually lasts a year but can be renewed annually. If you have one, the paperwork makes it easy to check what items are covered for repair or replacement. It can be discarded when you cancel the policy.
Of course today, all of this paperwork can be scanned and saved digitally. While you should hang on to physical copies of the deed and maybe the promissory note, the rest you could save on a hard drive or in another electronic form. The danger is if the hard drive fails, you will lose that documentation. Saving all your mortgage papers in a fire-safe lock box may be the safest way to store all that important information.