How Long to Keep Mortgage Statements

How long should you keep mortgage statements?

Here are some mortgage and homeownership documents that are important to keep:

• Monthly statements: Keeping your mortgage statements for one to three years is acceptable. However, if you're having problems with your lender or there have been errors on your statements, you'll want to keep them indefinitely. If you ever need to prove any discrepancies, you'll need your own copies.
• Annual statements: You may need your annual mortgage statements if you're ever audited by the IRS. Therefore, you should keep your annual statements for up to seven years after you file your tax return. This will help you prove any interest deductions you have taken.
• Closing documents: You should keep closing documents for the entire duration of your mortgage. The closing disclosure will show the amount you paid for the house, the initial loan amount, interest rate, escrow calculations, closing costs and other important information.

Chad D. Cummings, an attorney and certified public accountant at Cummings & Cummings Law in Bonita Springs, Florida, advised, “Keep key mortgage documents for as long as the loan is active and for at least seven years after it is paid off or the home is sold. This includes holding on to important papers like the promissory note and closing statement for the life of the loan (and often a few years beyond).”

• Home inspection documents: While a home inspection is only valid for three to six months, you should keep your copy for the entire duration of ownership.
• Disclosure forms: Keep the seller disclosure forms until after you have sold the property.
• Property tax statements: Keep any property tax statements for seven years after you file your taxes.
• Receipts for improvements: Keep any documentation for home improvements for seven years after you sell the house.
• Deed and title: You should keep your deed and title indefinitely. Cummings told us, “The deed and release of mortgage (a vital legal document which is filed in the county land records proving that the mortgage was satisfied) should be kept indefinitely and never disposed of or destroyed.”

Importance of keeping mortgage documents

It's important to keep your mortgage documents for liability purposes. In conjunction with each other, they prove the details of the sales, mortgage and the condition of the home at the time of sale. Documentation may be necessary if any legal issues arise while you own the property.

• Home inspection documents: The home inspection is a snapshot of the condition of the property at the time of sale. It's important to keep this in case an issue arises and you need to prove that you were, or were not, made aware of a particular situation. For example, if someone is injured due to a safety issue, you may need to prove you were unaware of the danger.
• Disclosure forms: When buying a house, the seller must disclose certain information. If you find an issue and can prove that the previous owner did not disclose it, you may have legal standing.
• Deed and title: Your deed transfers ownership from the seller to the buyer, and the title shows who has the right to own the home. It's important to keep these in your possession in case you ever need to prove you own the property.

Documentation for audits

Several mortgage documents are important for tax purposes. Cummings said: “Mortgage documents are essential for proving home-related tax deductions, especially if you face an IRS audit. If the IRS audits you (typically up to three years after filing, or up to six years for major understatements), you will need these records to back up your claims.

“For example, the annual Form 1098 from your lender shows how much interest you paid and supports your mortgage interest deduction. Even in Florida or Texas (which have no state income tax), you should keep these documents for federal tax purposes so you can readily produce them if needed.”

• Property tax statements: If you take a deduction on your taxes for paid property taxes, you'll need to show proof of how much you paid if you're ever audited.
• Receipts for improvements: Improvements that increase the value of the home, such as building an addition, can impact how much you'll pay in capital gains taxes when you sell the property. These documents serve as proof of your costs if the IRS audits you.
• Closing documents: The sales price and closing costs help calculate capital gains taxes, and loan details can resolve future mortgage issues. Because mortgages are often sold after closing, keep your own copies in case original documents are lost.

Documents for capital gains taxes

When you sell a home, the IRS lets you adjust your taxable gain by including costs like closing expenses and home improvements. To do this, you’ll need records such as your closing disclosure and receipts for improvements. Keeping these documents helps ensure you can prove your costs if you’re ever audited.

Examples of improvements the IRS considers part of your basis include:

• Additions
• Roof replacement
• Kitchen or bathroom remodels
• Driveway paving
• Installing a pool, deck or central air
• Rewiring the house
• Certain legal fees, such as defending the title or zoning

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Handling mortgage documents after a death

After someone dies, there are several documents you should keep:

• Deed
• Promissory note
• Sales contract
• Property tax records
• Home inspection report
• Home warranty paperwork

You'll want to keep most of these documents for seven years after the home is sold. Carl Holman, director of marketing at Foundation Mortgage, explained, “After a loved one passes away, retain the deed, mortgage statements, payoff letters and property tax records until the estate is closed and any potential disputes are resolved.”

“Keep the deed indefinitely if you inherit the property, as it is your proof of ownership. Loan payoff and release documents should also be kept permanently to show the lien was satisfied. Tax-related records should be stored for at least seven years in case of audits.”

Secure storage and digital backups

Keep paper copies in a fireproof safe or safe-deposit box and have copies of any digital files. Make sure that family members know where your important documents are kept in case of an emergency.

Cummings suggested: “Keep important papers in a secure place like a fireproof home safe or a bank’s safe-deposit box, and maintain digital backups of key files. Shred old statements and paperwork you no longer need to protect your privacy.”

“Make sure a trusted family member or executor knows where these records are kept in case of emergency. If you have any questions about what to keep, consult a qualified real estate attorney or CPA.”

What to do with old mortgage documents

When it's time to dispose of old documents, you'll want to do so securely. Paper documents should be shredded before being thrown away. If you have a large volume of documents to destroy, you can take them to a document shredding location, such as Staples or UPS stores.

If the documents are digital, you'll want to ensure you've erased the digital footprint of the file. If the files are stored on the cloud, check with the provider and follow their deletion instructions to ensure the files are truly erased from the system.