Mortgage Paperwork and documentation are key to your success and less stress when it comes to applying for a home loan. I wanted to pass along some information about your important paperwork, and how long you should hold on to certain papers. Being in the mortgage industry I can’t tell you how many times I have run into issues and have been forced to need a borrower to jump through extra hoops because they did not keep certain important documents on file. The list below should help you the next time you make a major financed purchase.
Conquering Your Paper Piles
There are many good reasons to keep your important papers in order and readily available.
If you are meeting with a financial advisor, tax preparer, Your Awesome Mortgage Broker, or attorney, it may take an hour to prepare instead of a week. If there is a fire, flood or theft you will be able to produce needed documentation without delay. If something were to happen to you or your spouse, your loved ones would readily be able to locate your insurance policies, banking statements, wills and unpaid bills. Good record keeping is essential, but do you know which documents to keep and for how long? Here is a quick list.
Bank Statements – Keep ATM and deposit receipts until you reconcile them with your monthly statement. File your monthly statements until your year-end taxes are complete, and then save those used to prove deductions for 7 years, however, we suggest you keep your most recent 12 months worth of bank statements available.
Investment Statements – Keep a minimum of the most recent 2 monthly or quarterly statements from brokerage accounts, 401k’s, IRA’s and other investment accounts. Keep end of year statements until you sell the investment.
Insurance Policies – Shred policies that renew annually as new policies arrive. These include your homeowner’s policy and your car insurance.
Credit Card Bills – Keep receipts for credit card purchases until you reconcile them with your monthly statements. After your credit card bill is paid, hold on to those that serve as proof of purchase for items under warranty, or those that serve as evidence for tax deductions, such as charitable contributions. Shred the remaining statements after taxes are complete.
Pay Stubs – Keep the calendar year’s pay stubs until you check them against your W-2’s, then shred.
Loan Documents – Keep mortgage, student and vehicle loans in a safe deposit box until they are paid off.
Savings Bonds – Keep these in your safe deposit box until you cash them in.
Vehicle/Boat/Trailer Documentation – Keep purchase receipts and titles in your safe deposit box until you sell the vehicle.
Federal and State Income Taxes – Keep these for a minimum of 7 years. Taxpayers can be randomly audited for three years after filing, but the IRS can audit anytime if fraud is suspected.
Investment Purchase Confirmations – You must keep these to establish your cost basis and holding period when you sell the investment, at which time these records need to be kept with your income tax returns.
Items You Must Save Indefinitely
- Birth Certificates
- Marriage Licenses
- Death Certificates
- Social Security Cards
- Divorce Decrees
- Military Discharge Paperwork
- Defined Benefit Plan Documents (pension plan documents from all current and former employers)
- Estate Planning Documents (wills, trusts, powers-of-attorney, etc)
- Permanent Life Insurance Policies (term life policies should be shredded after the policy expires)
- Inventory of Your Safe Deposit Box (update this list annually, or as you add or remove documents)
Even if you dread it, organizing your important papers can reduce stress in your life. Please remember when discarding your out of date papers, use a crosscut shredder to protect yourself from identity theft. By following these simple steps you can breeze through the home loan mortgage application here at American Mortgage.
~Steve Mugar the Mortgage Guy in Florida