When you close on a home, you get a wonderful gift at the closing table. A big fat folder full of documents that most people don’t understand and, frankly, don’t want to understand.
The question often comes up, ‘what do I do with these’ or ‘do I have to keep these somewhere safe?’ Sounds familiar right? These are the same questions we ask about our tax returns, insurance forms, etc. What the heck do I do with all this stuff?
Well, my answer is always to play it safe and keep it all, but there comes a point when you might have to build an extra room onto the house to make room, right? So how do you know what you really NEED to keep?
The NAR published a quick little list a few years ago, of documents they recommend you keep in a safe place:
- The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You’ll need this for income tax purposes and when you sell the home.
- The Truth in Lending Statement summarizes the terms of your mortgage loan.
- The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
- The deed transfers ownership of the property to you.
- Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.
- Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association’s rules and restrictions.
- Insurance policies provide a record and proof of your coverage.
This is in no way a complete list or a guarantee that these are the only documents you’ll ever need, but hopefully it gives you a little insight into the purpose of some of them, and if you ever have trouble sleeping, just pull some of them out and start reading. I guarantee you’ll be sleeping like a baby in no time.
About Ryan Hukill
