What Happens When You Pay Off a Mortgage?
Congratulations! You just paid off your mortgage. It’s probably one of the few times you actually enjoyed paying a bill. But, have you thought about what comes next?
Owning a home free and clear certainly creates new opportunities for your financial future. However, before making plans for your revamped budget, do your part to avoid unnecessary hassles down the road.
Document Your Achievement
After making that last mortgage payment, be sure to collect the right documentation. Most lenders will send it automatically, but it won’t hurt to call and make sure it is on the way. Ultimately, you’ll need a cancelled copy of both the promissory note and the mortgage (deed of trust). These are your proof that you have fulfilled your commitment.
In addition, the lender needs to release the lien that was placed on your property at closing. In some cases they may send this directly to the local deed office. If they send it to you instead, be sure you file it yourself to avoid confusion about the property’s title in the future.
Tell Your Insurer & Pay Your Taxes
Don’t forget to also tell your home insurance company that you have paid off your mortgage. Otherwise, collecting funds for an insurance claim could get complicated.
If you had previously used an escrow account to pay property taxes, you could have funds that need to be refunded. Regardless, you will be solely responsible for paying them from now on, so make plans to do so.
Plan for the Future
Now that you’ve attained this goal, it’s not too soon to start thinking about the next one. If the home you just finished paying off was your first, or your needs have changed significantly since moving in, you could be in a great position to upgrade.
The equity in your home will likely put new possibilities within reach, and could make the prospect of a new mortgage worthwhile. Or, with one property bought and paid for, investing in a second might offer financial returns you hadn’t considered.
In any case, Open Mortgage applauds your fiscal success and is standing by to discuss your lending needs. When you’re ready, call 512-492-3300 to find out how we can support your next financial milestone.