How Long Should You Hold On to Mortgage Statements?

With all important documents, it is always a question of “how long” before they become irrelevant. But the reasons for reviewing them can be quite different. Perhaps you are getting your affairs in order.

Maybe you have reached a certain age or had a recent scare with a serious illness. Probably in an end-of-life planning checklist, you were instructed to go through your paperwork to make it easier for your survivors to understand your complete financial picture after you are gone.

Jump ahead to these sections:

• Mortgage Documents
• Other Reasons for Keeping Mortgage Documentation
• How to Store Your Documents Safely

Or maybe you recently lost a parent or close family member. Perhaps you are trying to research what happens to a person’s mortgage after they die. Perhaps you are going through the items in your parents’ home, and you want to know if it is ok to throw out old mortgage statements.

Regardless of the reason, it’s important to know whether or not it is ok to throw out your mortgage statements. We’ve put together some tips for you to learn more about what paperwork regarding your home you should keep, which ones you can shred, and how you should store the documents.

Post-planning tip: If you are the executor for a deceased loved one, handling their unfinished business can be overwhelming without a way to organize your process. We have a post-loss checklist that will help you ensure that your loved one's family, estate, and other affairs are taken care of.

Mortgage Documents

If you have purchased a home, here are some of the documents you may have in your file cabinet, accordion folder, or shoebox under the bed.

Learn the basic purpose for each of the documents and a general understanding of how long you should keep them.

Mortgage statement

You may or may not receive a monthly mortgage statement in the mail. A mortgage statement is a document that tells how much is left to pay off your mortgage. It probably also includes other pertinent information regarding your loan.

Some mortgage companies have gone paperless for monthly correspondence. If this is the case, make sure you share the name of your mortgage company, the password, and your account number with your survivors.

In the document, you should be able to find your loan’s interest rate, how much of the payment goes to the principal of the loan, and how much goes to interest. You may be able to see how much money is in the escrow account, which your mortgage company uses to pay taxes and insurance.

Finding a mortgage statement of your deceased parent’s home is important. Besides learning the status of your parents’ mortgage, you will also learn the name of the mortgage company and the account number.

You should also be able to garner the customer service numbers from the document, so you can contact the company if necessary.

There’s much online discussion on how long you should keep monthly bills similar to mortgage statements.

Although there is no official government website that says how long you should keep a mortgage statement, most financial professionals would agree that as soon as you receive a new statement, you can shred the previous one.

Before you destroy it, make sure your prior payment was registered correctly. Report any discrepancies immediately.   

Keep your mortgage statement in the same place you keep your monthly bills. While some people choose to keep monthly reports inside a fireproof file cabinet, others may keep these monthly transactions in their planner or a file on the desk. Sometimes it is easier to have fast access to these documents.

Deed 

A deed is a document that states you own your home. The government and personal finance gurus say that you should keep the deed for as long as you own the home. 

Although government agencies record the fact that you own the house, you should still keep a backup document proving your ownership. Having your own copy of your deed is also much more convenient than having to obtain a copy of it from the local government agency. 

Keep your deed in a fireproof safe or safety deposit box. 

Promissory note

The promissory note details the terms of your loan between you and your mortgage company. It says that you agree to pay your monthly mortgage payment until the loan is paid off after 10, 15, or 30 years. 

Homeowners should receive these documents at closing. Keep your loan documents throughout the life of your loan. 

Store your promissory note in a fireproof safe or safety deposit box.

Property tax statements

You should receive a copy of your property tax statement once or twice a year, or perhaps quarterly depending on your state. This report will detail the estimated worth of your home, the tax rate, and how much your tax bill will be.

Homeowners should keep these statements for at least three years. Although the information on these statements is a part of public record, it is always more convenient to keep a carefully filed paper copy so you can find the information at a moment’s notice.

Contract and disclosure forms

When you purchase a home, you are also making a legal agreement with the previous owner. As a part of the purchase, the former owner probably had to fill out a disclosure form to share what is wrong with the house. 

It is important to keep these documents for the three years following the purchase of the home. Perhaps you uncover a problem with the home that you think the previous owner knew and tried to hide. You will need to have a copy of the disclosure statement if you need to sue or settle with the former owners of the home. 

Home inspection documents

Like the disclosure statement filled out by the previous owners, you should keep the home inspection reports for at least three years. If a significant problem was uncovered after you purchased the home, and the home inspector did not notice it in his or her examination, you may be able to seek legal recourse against the inspector, although it may be very unlikely.

Even though there may not be a legal reason to keep the home inspection documentation after you have owned the home for more than three years, you might find the information listed on the form helpful and interesting. 

In this form and the disclosure statement, you may find information on the approximate age of the roof and appliances. This will give you a better indication of the appropriate length of time to wait before you have the items replaced. 

Keep the home inspection documents with the rest of your mortgage papers. Ideally, they should be stored in a fireproof safe or safety deposit box.

Home warranty

As a part of the negotiation process, the previous owner may have purchased a home warranty for the buyer. Keep the documentation connected to this warranty until it expires.

Receipts 

If the previous homeowner left receipts for major purchases, renovations, or repairs done on the home, keep these records. For example, you may be able to reach out to the same fence company if a section of the fence settles and needs replacing. You may be able to determine that it would be better to replace a refrigerator instead of repairing it for the fourth time.

Other Reasons for Keeping Mortgage Documentation

We have talked about the benefits of keeping your mortgage documents and receipts for home repairs. Keeping those records can be useful in legal cases should something go wrong within the structure of the home. These documents could also help determine the lifespan of appliances and fixtures. 

There are other reasons that you should keep such documents. Let’s look at some of the other reasons.

Keep the documents in case of an audit

The IRS website says that auditors typically do not go back further than three years when reviewing financial records, but they may go back as far as six years. If you have not bought or sold the property within the last three years, you may only need to have access to the property tax documents for your audit. 

Keep the documents in case of having to pay capital gains taxes

If your property’s worth skyrocketed between the time you purchased the property and the time you sold it, you may have to pay capital gains taxes. In most cases, a married couple’s primary residence will have had to increase in worth by more than $500,000 before these taxes apply. 

Keeping your mortgage documents may be necessary to prove the property’s worth over time. 

How to Store Your Mortgage Statements Safely

Consider investing in a small fireproof file cabinet or safe to keep your family’s documents secure in the case of an emergency. You may also consider renting a safety deposit box at a local bank.

Some people may keep digital images of their records with a designated secure and remote cloud service provider such as Google Drive, Dropbox, iCloud, and others. While this would be a great backup location to store your documents, you should also keep a paper copy as well.

Finally, make sure your loved ones know the location of your accounts, account numbers, and passwords, and keep the documents in clearly marked files.

Sources

1. IRS Audit. July 10, 2019. www.irs.gov/businesses/small-businesses-self-employed/irs-audits.