Paperwork You Must Keep

Important Documents

Important Documents are needed when applying for a mortgage. Please read below to find a list of some of these Important Documents, that are often not thought to be associated with the mortgage process by clients.

Separation Agreement

When you apply for a mortgage one of the first question we ask is marital status. If your answer is separated or divorced then the banks are going to want to see the official separation agreement document. They are seeking to ensure that you do not have any alimony or child support payments which will make it difficult to pay the mortgage. The legal system only keeps these documents for 7 years after which you will not be able to get a copy. You marital status is reported on your tax return which can trigger the request for this document long after it seems relevant.

Proof of Debts Paid

Keep all records of proof of debts paid. Here are three examples.

1. Client A has paid off her mortgage; she receives verification from the bank and promptly destroys the paperwork. Due to a clerical error the debt as paid is not reported to land titles so the mortgage remains vested against the property adding additional steps when she goes to get a new loan.
2. Client B pays out his truck loan in full and receives a letter stating this. Due to a clerical error the interest accrued shows a small outstanding balance. The client believes all is well while the small debt quickly hits a written off status on the credit bureau and he is declined for a mortgage three years later.
3. Client C settles with a collection agency on a debt gone bad – The debt is not reported as paid to the credit agencies and the ‘ongoing’ bad debt causes a large drop to her credit score and she pays higher rates than she should. The collection agency has since gone out of business and there is no record of the payment to be found.

Bankruptcy/ Orderly Payment of Debts

As with the separation agreement, the trustee will only keep a copy for 7 years. When you apply for a mortgage, the bank will want to ensure they were not affected by the bankruptcy and also to determine if there was a foreclosure. Even though this information is supposed to fall off the credit report that is not always the case.

Child Maintenance

Whether paying or receiving child support, you will want to keep all correspondence in regards to this to ensure you are receiving the appropriate credit for monies paid or have been given all the money you were supposed to have received.

Emotionally you have valid reason to want each of these documents far away from you but realistically you are likely to need them at some point. There are a number of online services such as Dropbox of Google Drive where you could scan these to yourself and save them digitally. Alternatively, you could spend a small amount of money on an accordion style file folder and go old school with actual paper copies of all of the above applicable to your situation. Click on the link to find some examples of Important Documents for your reference.

Original Article – Dominion Lending Centres – September 29, 2017