After you sign the large stack of papers that the lender puts in front of you at the closing, you probably wonder which of those documents you actually have to keep. There are what seems like hundreds of papers, do you really need all of them cluttering up your home?
While you probably don’t need every document, there are certainly some that you will want to keep, as they can be important to you down the road.
You signed a purchase contract when you agreed to buy your home. This document outlines your rights as well as the rights of the seller. The rights are held up to the letter of the law. This means if the seller doesn’t follow through on promises made in the legally binding contract, you could take legal action against him/her. The same is true if you don’t follow through on your end of the bargain too.
Keeping a copy of the contract handy will help you understand your rights and what you promise to do as the buyer. If you have any questions, you can refer back to the document or use it to show the seller when/if they are not following through on their promises.
Purchase Contract Amendments
If after you sign the contract, you have to put in a few amendments, you should keep a copy of them as well. Many buyers have an amendment after they have the survey, inspection, or appraisal done on the home. If there’s something that they have to renegotiate with the seller or the seller agrees to fix something, it should be put in writing as an amendment to the purchase contract.
Again, keeping these documents at home can help to keep the seller accountable if anything comes up down the road. If at your final walkthrough the seller didn’t’ do as promised, you can request a later closing date. You’ll also want to keep the addendum long after the closing in case anything comes up with the issues the seller was supposed to fix or otherwise care for before you closed on the home.
Sellers are obligated by law to disclose any issues with the home that they know of at the time of the purchase contract. If something comes up down the road that is wrong with the home and it can be pinpointed back to before you bought the home, you can use the seller disclosures to prove that the seller didn’t disclose the issue.
While you don’t want to think of having legal issues after you buy the home, something could come up that could make you want to seek legal action against the seller. If you don’t have proof that the seller didn’t disclose a major issue, you may not win the case in court.
The Closing Disclosure breaks down all of the fees you pay to get your mortgage. It also discloses the terms and interest rate of your loan. It’s an easy document to come back and reference should you have any questions about your loan’s term, interest rate, or payment.
You can also use the Closing Disclosure at tax time. When you have your tax professional prepare your taxes, you can inquire about writing off any of the closing fees that you paid. While it’s tougher this year to get any deductions outside of the standard deduction, you never know when an expense might be able to be written off on your taxes. This form is the easiest way to prove that you paid the fees.
The note will show the name of the lender, the interest rate of the loan, and the amount of money borrowed. It’s a good reference to have should there be any issues down the road. The note can also be proof that you need moving forward if you want to take out a second mortgage or you want to refinance your current loan. Lenders use the note to have concrete proof of your original loan amount and the interest rate you pay.
The mortgage deed is what gets recorded with the county and becomes public record. This is what proves your ownership of the home. Hopefully there aren’t any issues that come about regarding your ownership in the home, but if they do, the mortgage deed would be your best way to prove your ownership, especially if the issue went to court.
Title Insurance Policy
When you take ownership of the home, the lender requires that you purchase lender’s title insurance. You also have the opportunity to buy an owner’s policy. The title insurance policy protects you should anyone come and try to stake a claim in your property.
Again, if the case had to go to court, the title insurance policy would help prove your case as well as help you cover the cost of the court and lawyer charges.
While it’s best if you keep all of the closing documents you are provided, the above documents are the most important. They can help you during tax time as well as if any issues arise with the home or its ownership in the future.