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.
Papers You Must 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
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
Your mortgage note (one of the
closing documents you signed) states the terms of your mortgage, including the date on which your payments must
the location to which they must be
the penalty charged for late
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
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
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
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.
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
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
Check for leaky faucets; replace
washers as necessary.
Check attic for proper ventilation;
Clean drapes and blinds; repair as
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 wont clog them.
Check roof for leaks; repair as
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 manufacturers instructions.
Clean refrigerator coils.