Your New Home
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.
Documents You Should Keep
You should keep a copy of every document you signed your name to at the closing meeting. Its 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 homeowners and title insurance. You would need to have access to your homeowners 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.
Its 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 youre 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 dont 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 youre laid off from your job or if youre 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. Youll receive a statement that shows your mortgage balance and the total amount youve paid in principal and interest. Youll 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 cant 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.
Its a good idea to set up a budget for your homes 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 homeowners insurance (if theyre 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:
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).
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 manufacturers instructions.
Check for leaky faucets; replace washers as necessary.
Check attic for proper ventilation; open vents.
Clean drapes and blinds; repair as needed.
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 wont 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.
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 manufacturers instructions.
Clean refrigerator coils.