Closing Day can be the most exciting chapter on your life but it comes with so many documents and forms that it’s hard to know what’s important and what can be discarded for later use. I’m always impressed when someone has their original closing documents dozens of years after purchase because most homeowners usually only keep whatever documents may have been emailed to them in connection with their closing or settlement. However, here’s a quick list of items that you should keep at the ready throughout your entire ownership time.
Closing Disclosure / HUD-1 Settlement Statement
The Closing Disclosure (or HUD-1 Settlement Statement for a cash purchase) is your receipt for the purchase of your home or, in the case of a refinance, the line of credit or new mortgage that’s being applied for. This document contains critical information that can be useful throughout your home ownership as well when you go to eventually sell. We send a copy of these documents to our clients via email but it’s one that should be kept both digitally and in hard copy in a safe place that can be accessed.
The Closing Disclosure and HUD-1 will have the purchase amount, taxes being paid, commissions and attorney’s fees that are paid in connection with the closing, as well as the Title Insurance information. If you purchased a home with a mortgage, you likely also purchased Title Insurance (there’s two types of policies but attorney’s generally recommend purchasing the additional Owners Title Policy). The Title Insurance binder is also another document that you should keep (preview – it’s one of the other documents mentioned below) but in the off chance that you don’t place the Title Insurance information with your other critical documents, the Closing Disclosure and HUD-1 will give you the name of the Insurer and possibly the binder number.
When you refinance, you should also keep your Closing Disclosure, HUD or ALTA as your refinance will show proof that your former mortgage was paid in full in connection with the refi. The Closing Attorney that handled the refinance is supposed to ensure that your former lender filed what’s called a Satisfaction or Cancellation with your local Register of Deeds to serve as evidence that you no longer owe this debt. This doesn’t always happen and can create a big issue down the road, especially when you’re trying to sell. Therefore, always keep Closing Disclosures and HUD-1 Settlement statements in a safe place throughout your property ownership.
If you no longer have a copy of your closing statement, contact your Realtor as they should have a copy still on file.
2. Title Insurance Policy
Title Insurance protects you against someone making a claim or error that could cause a clouded title to your property. An example would be a incorrectly filed deed or a prior owner coming back to claim ownership. If you purchased your home with a mortgage, there is an Owners Title Policy and a Lenders Title Policy. Unless you were really trying to save a buck (and it would be really ill-advised), chances are that you have both policies on your property.
At closing, the only document that you would have received referencing your Title Insurance policy is the closing statement or HUD-1. The actual policy binder will arrive in the mail a few weeks after closing and it’s yours to keep with other important documents.
If you resell your home within 10 years, the new purchaser can tack to the current policy (saving them a little money) but, more importantly, if you have a claim against you that could cloud the title of your home, you will need to get in touch of your Title Insurance company right away. I wish there was something that the Title Insurance Companies would send out annually to say “hey – you have this…” but they don’t so it’s up to you.
If you purchased a single family property, hopefully you also spent a few hundred extra dollars to obtain a survey. This will be essential to have at the ready whenever you are planning to make improvements to your property such as add an additional or fence (most municipalities will want to see your improvement drawn on a survey). This will be given to you either at closing or before directly from the surveyor and should be kept someplace where it can be easily accessed. Originals are not needed so scan a copy to keep where you store other important documents online and then file it away with your other documents.
4. Old Appraisal
I usually get dirty looks when I ask a homeowner for their old appraisal as none of the information in the file is of much value beyond the closing. However, almost all appraisals will have a measurement contained within of your home’s heated square footage. This is great information for when you are eventually selling, looking to refinance or appealing a property tax bill.
After your Deed is recorded with the local Register of Deeds from the purchase of your home, you will receive a copy in the mail usually 7-14 days after. This isn’t a critical document to keep since it is recorded at the courthouse. However, I’ve noticed a trend of scammers offering to sell you this information – which is readily available for FREE. Yes – ABSOLUTELY FREE! The only time you have to pay for a Deed is if you go to the courthouse and you have to pay a nominal fee to print the document out. However, almost all Register of Deeds offices post this online (which is how the scammers know you purchased a house).
6. IF YOU HAVE A SEPTIC – Septic Permit
Septic systems are permitted through your local Health Department however their record keeping can be spotty at best. As a result, it’s a good idea to keep a copy of your septic permit so that you know the location of your system, the design and how many bedrooms it’s permitted for. Also, if there are issues, having the installer’s information is useful.
7. IF YOU PURCHASED A NEW CONSTRUCTION HOME – Lots of pictures pre-drywall
During the construction phase, I highly recommend scheduling a site visit with the Builder and taking lots of high resolution pictures of each room before the drywall goes up. This can be done at the same time you’re having your independent inspector tour the home before the drywall (and no – the county permit process is not the same as a home inspector). This is extremely useful information to have when you are making repairs and improvements to your home since the only other way to see inside the wall is to take down the drywall. Taking an hour to take detailed photos of each room of your house can go a long way to saving you down the road.