Buying a house is a major milestone, but for most people, taking on a mortgage does bear some weight. What happens when that 30-or-so year stretch is over and you've paid the house off in full?
Here's what happens with your home when your final payment is through.
With mortgage payments done, you officially own your home in full.
Throughout the course of your mortgage, you own a portion of your home. The equity starts with the down payment and increases in tandem with your monthly or bi-weekly mortgage payments. Once it's all said and done, you won't have to pay your monthly mortgage bill any longer, although you will still be on the hook for property taxes and other dues.
Before sending the final check, request a payoff quote from your home loan provider.
You will want to know how much money remains on your mortgage before sending in the final payment. You can do this by contacting your loan provider and requesting something called a "lender payoff quote" or "lender payoff statement."
The payoff quote provides the loan's principal balance, interest, and deadline for when you need to have the loan paid off. You can pay it off earlier than planned by informing the lender that you're applying the funds to your principal balance.
Sometimes, fees accompany the end of a mortgage (it doesn't sound fair, but it's reality), so make sure you're prepared for any that may arise by checking with the lender beforehand.
To access your payoff quote, visit your lender's website and log in to your account. Look for a place to request a payoff quote. If you can't find one, pick up the phone and call the customer service number.
Make sure you receive all of the necessary documents
Once you make the final payment as outlined in the payoff quote, you'll receive documents like:
The deed to your house (either you will receive this directly or it will go to the local government office)
A certificate of satisfaction between you and your lender that costs upwards of $50 to record
Final mortgage statement that's zeroed out for good measure
An official letter from your lender declaring that you've paid off your mortgage
Canceled promissory note (only some lenders send this)
Also, cancel any automatic payments you've set up. If your mortgage escrow account is still open, get a refund of what's left. Redirect any tax and insurance statements to your home if you haven't already.
Finally, check property records to make sure your house payoff is listed.
Your local government should record that you have paid off your mortgage, so double-check this to ensure that they update their records.
Don't forget to celebrate the massive achievement of paying off your home in full. In 2020, about 38 percent of U.S. homeowners had paid off their house in full, but that number has likely decreased since a massive influx of demand swept the housing market. Paying off a mortgage is nothing to be shy about. Just make sure you do it right.