It’s fine to celebrate paying off your mortgage early — just be sure to tie up some administrative loose ends after the party. Depending on state and local customs, there may be things you need to do to make sure everything is in order.
Mortgage payoff documentation
Once your loan is satisfied, you should receive certain documents from your mortgage lender or servicer. These may include a statement showing that your balance is paid in full, such as:
- Canceled promissory note
- Certificate of satisfaction
- Canceled mortgage or deed of trust
Other common terms for these documents are:
- Mortgage release or Release of mortgage
- Satisfaction of mortgage or Mortgage satisfaction
- Deed of reconveyance
- Release of trust deed
For the most part, any canceled note and mortgage paperwork you receive from your lender is simply for your records.
Filing official deed payoff record
Generally, a lender or mortgage servicer sends a document to the county recorder of deeds’ office (or the official entity in your location handling property records).
However, this important step can take some time. A mortgage lien holder does have a legal obligation to release the lien when the debt is paid, but since this final step of handling your loan doesn't generate any revenue for the lender (just expenses for processing and recording) it may not be treated as a priority. So, allow your servicer some time to release the lien, perhaps up to 90 days, then follow up to see if it has happened.
If your lender doesn't automatically do this -- or has completed a "satisfaction notice" and sent it to you but not the local authority -- you can take steps to file it yourself. You may need nothing more than the original promissory note with the marking "paid and canceled" on it or your lender’s satisfaction notice. Contact your local registrar's or county clerk's office to find out about the procedure to file the paperwork and whether or not there is a fee to do so.
To see if it has been completed by your lender, there's generally no reason to have to actually drive to the county recorder's office -- the vast majority of local jurisdictions make these records available online. One good place to start might be NETROnline which offers connections to online records in all states. Alternately, you can search online for "property records [your county or parish and state]" to see what comes back for your location.
If you've paid off your mortgage and waited a few months, and checked online records but see no recorded release, contact your lender or servicer's Lien Release Department to find out about your paperwork’s status. Ultimately, it's to your benefit to have all your mortgage’s loose ends tied up, or you could end of with a "cloud" or "defect" on your title that can make it a challenge when it comes time to sell your home.
Obtain mortgage escrow refund due and plan ahead
If your servicer has been handling routine payments for property taxes and homeowner’s insurance on your behalf, there may be some money left in your mortgage escrow account. A refund of any money in the escrow account in advance of regularly scheduled payments should be returned to you. If you are due a refund, expect to see it come to you within the next 90 days.
If your servicer was handling property tax and insurance payments for you, they are now fully your responsibility.
- Contact your homeowner's insurance company and let them know that you've paid off the mortgage and that bills should be sent directly to you.
- Ask that any reference to the former mortgage holder be removed from the policy.
- Budget for ongoing property taxes and begin accumulating funds to pay them.
- Determine tax payment timing (some local tax authorities accept annual payments and others expect quarterly remittances) and arrange to have invoices sent directly to you.
After you're certain that everything's properly recorded and complete, check your credit report to make sure that the mortgage satisfaction has been noted there. You can get a copy of your credit records free of charge at AnnualCreditReport.com, the government-sponsored site where records from all three credit bureaus are consolidated and made available.
For your filing cabinet or safe deposit box, retain some documents related to your mortgage. For loans made up to mid-2015, keep the loan's original HUD-1 form (for more recent mortgages, this is the loan's "Closing Disclosure" form). This shows the original price you paid for your property, which becomes the basis for calculating any capital gains taxes you may owe when it comes time to sell.
Also save copies of the deed and any notice(s) of mortgage satisfaction you've received over the years (including any from any previous refinances).
You determined a method to prepay your mortgage and succeeded in retiring it -- congratulations!
You can return to the previous article and review various mortgage prepayment methods, or even jump back to the beginning of this Mortgage Prepayment Guide.
If you're interested in borrowing from the equity you accumulated, see our Guide to Home Equity Loan and Lines of Credit.
If you're over 62 and want to learn how to tap your equity payment free, you'll want to check out our comprehensive Guide to Reverse Mortgages and Home Equity Conversion Mortgages.