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This
section discusses loan closing documents you must keep, your new
mortgage loan responsibilities, and what to do if you have questions
about your loan.
Papers
You Must Keep
You should keep
a copy of every document you signed your name to at the closing
meeting. It’s especially important to keep a copy of your settlement
form. You will find it useful when you file your taxes and if you sell
your home. For example, the real estate taxes and loan discount points
you paid as part of your closing costs are tax deductible. So, when
you file your taxes, you will need to refer to your settlement form to
get these amounts.
In addition to
the closing documents, you should keep all insurance records, such as
homeowner’s and title insurance. You would need to have access to
your homeowner’s policy if, for example, someone were to sue you
because they were injured on your property. And you would refer to
your title insurance policy if you were to find a flaw in the title
after you bought the house.
It’s a good
idea to keep these important records in a safe place. You may store
them in a safety deposit box or a bank vault in addition to keeping a
copy of them in your home.
Making
Your Loan Payments
Your mortgage
note (one of the closing documents you signed) states the terms of
your mortgage, including
the date on
which your payments must be made,
the location
to which they must be sent, and
the penalty
charged for late payments.
Usually after
the closing meeting, your lender sends you a coupon book to simplify
the mortgage payment process. Each month, tear off a new page from the
book and mail it with your check. Remember to write your loan number
on the check to ensure that your payment is credited correctly.
Some lenders can
automatically deduct your monthly payment from your checking account.
This saves you time and postage costs. And, it can prevent the
possibility of missing a payment. You can ask if your lender provides
this service.
If
Servicing of Your Loan Transfers
At the closing,
your lender is legally obligated to provide a statement showing how
frequently your lender transfers (or “sells”) servicing on
mortgage loans to a third party. This means that someone other than
the lender who originated and approved your loan will service the
loan. Servicing includes the collection and processing of your monthly
payments. You must be notified of the transfer by both your original
lender and the new lender. Remember, never send your mortgage payment
to a different party until you’re officially notified of the
transfer by your lender.
In some
instances, your lender may sell your mortgage to an investor, such as
Fannie Mae®. This is how Fannie Mae makes sure lenders
don’t run out of mortgage money. However, you would still send your
monthly payment to the lender who services your loan.
If You
Have Loan Questions
Anytime you have
questions about the terms of your loan or run into complications,
contact your lender. You may have an emergency that changes your
financial situation. For example, if you’re laid off from your job
or if you’re sick and temporarily unable to work, you should contact
your lender immediately if you have a problem making your monthly
mortgage payment. Otherwise, you risk losing your home. Your lender
should be willing to work with you to resolve the problem. Various
types of relief may be offered to give you additional time to make the
payment.
At the end of
each year, your lender will be in contact with you. You’ll receive a
statement that shows your mortgage balance and the total amount
you’ve paid in principal and interest. You’ll need to know the
amount of interest paid to file your taxes. The tax deduction for
interest alone may save you thousands of dollars in federal income
taxes. Especially in the early years of your mortgage, the bulk of
your monthly mortgage payment is interest.
Home
Maintenance Checklists
Your mortgage
requires that you adequately maintain your property and not allow it
to deteriorate. And, as a homeowner, you can’t afford to sit back
and defer maintenance. You can extend the life of appliances and
fixtures and avoid expensive repairs by doing routine maintenance
yourself.
It’s a good
idea to set up a budget for your home’s regular maintenance and
unexpected repairs. You may want to budget 1 percent of the purchase
price of your house to cover annual maintenance and repairs. You also
want to adhere to a regular savings plan to cover essential bills,
emergency repairs, and large, periodic expenses such as property taxes
and homeowner’s insurance (if they’re not held in an escrow
account by your lender). Some financial advisors suggest saving 5
percent of your take-home pay. You must commit this amount every
payday to make it happen.
The following
seasonal checklist will give you an idea of what you can do in the
fall and spring each year to maintain your home:
Spring
Checklist
Outside Items
Check all
weather stripping and caulking around windows and doors, especially
if you have air-conditioning.
Check outside
of house for cracked or peeling paint; caulk and repaint as
necessary.
Remove,
clean, and store storm windows (if removable).
Check all
door and window screens; patch or replace as needed; put screens up
(if removable type).
Inside Items
Replace
filters on air-conditioners.
Check and
clean dryer vent, stove hood, and room fans; change or clean filters
on furnace.
Check seals
on refrigerator and freezer; clean refrigerator coils; clean burner
surfaces; adjust burners.
Clean
fireplace; leave damper open for improved ventilation if home is not
air-conditioned.
Check
basement wall and floors for dampness; if moist, remedy as
appropriate.
Clean
dehumidifier according to manufacturer’s instructions.
Check for
leaky faucets; replace washers as necessary.
Check attic
for proper ventilation; open vents.
Clean drapes
and blinds; repair as needed.
Fall
Checklist
Outside Items
Check all
weather stripping and caulking around windows and doors; replace or
repair as needed.
Check for
cracks and holes in house siding; fill with caulking as necessary.
Remove window
air-conditioners, or put weatherproof covers on them.
Take down
screens (if removable type); clean and store.
Check storm
windows and doors; clean and repair as needed; put back up (if
removable type).
Drain outside
faucets.
Clean gutters
and drain pipes so that leaves won’t clog them.
Check roof
for leaks; repair as necessary.
Check
flashing around vents, skylights, and chimneys for leaks.
Check chimney
for damaged chimney caps and loose or missing mortar.
Check chimney
flue; clear obstructions; make sure damper closes tightly.
Inside Items
Check
insulation wherever possible; replace or add as necessary.
Have heating
system and heat pump serviced; have humidifier checked; change or
clean filters on furnace.
Drain hot
water heater; remove sediment from bottom of tank; clean burner
surfaces; adjust burners.
Check and
clean humidifier in accordance with manufacturer’s instructions.
Clean
refrigerator coils.
Clean
fireplace.
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