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Q&A: Should I keep refinance records?

Q: I’ve just closed on a refinance of my mortgage to a lower interest rate. There are reams of paperwork, and I’d like to know what I should keep handy now that it’s complete.

A: Refinancing is an excellent way to organize your finances, says Chandra Ortiz, an attorney on the Nassau County Bar Association Real Property Committee, but managing your refinance post closing is important, too. “Upon closing on a refinance, a property owner should make a copy of the HUD-1 settlement statement to give to their tax adviser. This is important so that a tax adviser can determine what expenses associated with the refinance may be a tax benefit to the property owner, if any," she says.

The HUD-1 settlement statement lists each expense, including any payoff of certain debts associated with the refinancing of the property.

“It is also advisable to review and keep handy a copy of your initial escrow statement," Ortiz adds.

This document provides the basis for understanding where your loan payment starts in principal, interest and escrows. It is a road map for navigating your monthly mortgage statement and checking for mistakes on future payment statements. This document will give you an initial understanding of how your monthly payments are being applied to the loan, payment of taxes and insurance on the property.

Lastly, and of great importance, if you have refinance with a variable interest rate product, you must know when that initial interest rate will change and how much that change will or can be, says Ortiz. This information is set forth in the promissory note you signed with the lender -- a formal document in which you make a promise to repay the money you are borrowing.

Keeping these three documents readily available will assist any homeowner in managing their refinance decision post closing, says Ortiz.

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