When you purchase a home, condo, or co-op, you will likely sign – and be sent home with – a mountain of documents. Should you keep these? On the whole, yes. They contain key information about your ownership, and in some cases will help you prove to the world (should the need ever arise) that the home is yours.
Let’s take a closer look at what you will likely receive. These will likely fall into two categories: documents relating to your mortgage loan (unless you paid all cash!) and documents relating to the transfer of the property itself.
Closing Documents Relating to Your Mortgage
Below is a summary of the main documents your lender will give you (most likely via your attorney or escrow/title agent). However, there may be more. For instance, your lender may ask you to sign an affidavit promising that you will live in, not rent out, the house.
- Promissory note, or “Note.” You’re stating that you’re borrowing X amount of money and personally guaranteeing to repay it.
- Mortgage or Deed of Trust. Here’s where you agree to have a lien put on your house as security for the loan. It turns your house into collateral, which the lender can claim in foreclosure if you fail to repay or to otherwise follow the terms of the Note (you “default”). The lender will record your mortgage with the appropriate local government office.
- UCC-1 Financing Statement (co-ops only). Since co-op financing involves no mortgage, your lender may instead fill out and record this document, to show its claim on your property interest.
- Truth-in-Lending (TIL) Disclosure Statement, or “Regulation Z form.” You should have seen an earlier draft of this, within three days after applying for the loan. Here, the lender will break down all the payments you’ll make in connection with your loan. It will confirm your interest rate, the annual percentage rate (“APR”), and the total cost of the loan over its life.
- Closing Statement, Settlement Sheet, or HUD-1 Settlement Statement. This is the statement described above, usually prepared by your closing agent using a HUD-1 form. It itemizes each payment to be made by you and the seller, not only for the house, but for other costs such as services performed in connection with the sale, insurance premiums, paying off liens, and more. (The seller will need to sign it, too.) Before stuffing the HUD-1 statement into your files, check whether your closing agent included a refund check with it (for any extra money that you deposited ahead of time).
- Monthly payment letter. This tells you how much money you’ll pay in monthly loan principal and interest. It may also include amounts that your lender requires you to put into escrow each month for payment to third parties such as the tax collector or insurance companies (homeowners’ or PMI). Your closing agent will take care of setting up this account on closing day.
Closing Documents Related to Transferring the Property
Another important set of closing documents serves to transfer the property to you. At a minimum, these include the items below, though others may be added depending on where you live, for example, to account for local transfer taxes. Some documents you won’t even have to sign, you’ll just receive them from the seller: perhaps a certificate saying that the house has smoke detectors, or a certificate of occupancy showing that the house has passed a municipal or local inspection for basic habitability and legal compliance.
- Deed (or “warranty deed”). The seller signs this to tell the world that title of the property has been transferred to you, the new owner. (The deed also states the purchase price, or enough information that the price can be figured out—which is how services like Zillow obtain this information.). Your closing agent will, as the last step in closing on the property, file a copy with the appropriate public records office.
- Co-op buyers only: Stock certificate and proprietary lease. Instead of a deed, co-op buyers receive a stock certificate indicating how many shares they own in the corporation and a proprietary lease outlining their rights to live in a certain unit. Your lender will probably keep these in its files.
- Bill of sale. This document attests to the transfer of any personal property from the seller to you. In other words, if the sale includes any nonfixtures such as a children’s swing set, curtains, or a floor rug, the bill of sale creates a record of this agreement.
- Affidavit of title and ALTA statement. Here, the seller swears to the title insurance company to have done nothing to cloud the house’s title and to know of no unrecorded contracts, easements, or leases regarding the property. The seller signs the affidavit, but both you and the seller sign the ALTA statement to finalize your request for title insurance.
Once all the documents are signed, you will be given a complete set for your records. Some closing agents will put them onto a CD for you. Keep everything in a safe place, such as a safe deposit box. Don’t assume that your closing company will keep a copy for you — they are allowed to toss most of your records after five to seven years.
For more information on the closing process, see the articles on the "Escrow and Closing" page of Nolo's website.