When you close on the purchase of a house, it seems the stream of documents will never end. Closings can easily involve 100 pages of records. It’s a fact that, for most people, their home is their biggest investment. That’s why homeowners should keep important closing documents. After the writer’s cramp eases, what do you need to file away? Here’s a list of must-keeps.
Documents from the house-hunting period
If you work with an agent, she will keep copies of your agency agreement, but you should keep a hard copy as well as a digitized version on an external drive with other closing documents. If the agent sent them to you to DocuSign online, be sure to save that digital file and a hard copy.
Congratulations! You have a contract!
Keep a copy of the Offer to Purchase and Contract between you and the seller, which spells out the purchase price, earnest and option money amounts, how you’ve agreed to share closing costs, repairs you and the seller have negotiated and much more. Keep all addendums and riders to this agreement as well. If these documents were DocuSigned online, save the digital signatures, but also keep a hard copy.
About the house and its condition
In many states, sellers must complete and sign a disclosure form regarding the property’s condition, listing every repair and defective condition they know the property has or had in the past. This includes items like water damage; the presence of wood-destroying insects, asbestos or lead-based paint; and many other conditions. If you later discover problems that weren’t disclosed in the report, you may need this form to determine whether the seller is responsible.
Once the sellers sign a disclosure form, you should have the home professionally inspected. Keep a copy of the inspection report with your other closing documents. If the sales contract is amended to require the seller to make a repair, you’ll need documentation in case the repair later proves to have been inadequate.
If the seller provides a home warranty, it is vital not only to keep it but to read it immediately to determine if you need to register or validate the warranty within a certain period after closing.
Documents on mortgage, closing and taking title
Not long after signing a contract to purchase a home, your agent or the title company should send you an estimate of closing costs known as the Closing Disclosure (CD). The final version of the CD must be provided to you no less than three business days before closing. Keep both a digitized and an original copy of it with your other closing documents.
Keep copies of all docs involved in your mortgage application process. Your mortgage company must provide you with a good faith estimate of the terms and costs of the loan. As with the CD, you may receive an estimate early in the application process and a final document later. It is essential to keep these.
You should keep a copy of the promissory note you sign at closing. Also, hold on to a copy of your homeowners’ insurance policy and its declarations page.
Two title insurance policies are involved in closing on a home purchase, and you should keep copies of both. The seller provides one of the policies, assuring the buyer that the title company has thoroughly searched property records and found no known encumbrances such as liens, breaches of property lines or other deficiencies. You provide the other title policy to your mortgage company to protect its interest in the property you are purchasing in the event you later default on your loan.
The seller and buyer both sign the property deed, which conveys the property from the seller to the buyer. The county register’s office will record this deed and return it to you. Be sure to keep the original. If you are taking out a mortgage to purchase the house, you will sign a deed of trust, representing the fact that a trustee holds the actual deed for the mortgage company until the mortgage is paid off. Keep this document as well.
Those closing documents are here somewhere!
Keep all these closing documents for as long as you own the house, with the digitized versions on both your computer and an external drive. Hold onto the closing statement for several years after you’ve sold the home since it affects your income taxes.
Should something happen and you lose both the digital and hard copies of any of these closing documents, other parties should have them. Your agent will have a copy of your buyer’s agreement and the purchase contract. The title company will have the purchase contract, title policies, and related docs. Your mortgage company will have everything related to your financing and the deed of trust. The deed of trust will also be on file with the county clerk’s office.
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