What Happens After Your Last Mortgage Payment?

Paying off your mortgage is a ginormous marker of success in your home. It is exciting to know that you are the sole owner of your property. This is a moment to celebrate but also make sure that you take important steps to solidify that you are the legal owner of the property.

The process of making that final mortgage payment

As you make the last and final payment on your mortgage loan, your lender will contact you probably in the form of sending a canceled promissory note. The promissory note is a document that you signed stating you promised to pay back the agreed-upon amount of the loan when you first took it on. The canceled promissory note officially states that you have fully repaid the agreed-upon amount for the loan and you are no longer responsible for future payments.

Some mortgage borrowers might also receive a certificate of satisfaction that states you no longer owe any money on the purchase of your home.

Once a mortgage is paid in full many lenders will additionally send a notification to the county or city recorder that the mortgage borrower is now the only titleholder to the property. This is a process that can take several weeks so it is a good idea for mortgage borrowers to check in with the lender and the local recorder’s office to ensure that these steps have been taken.

Some lenders might expect the mortgage borrower to conduct the step and neglect to communicate this with the borrower. This is why it is good to check in to see if this process has been started. If the lender is leaving it up to you, you want to make sure you know this so that you can have things happen in a timely matter and not go on thinking you are the only one on your home title. You want to make sure that the mortgage lien the lender-placed on your home has also been removed.

In addition to checking in on the title transfer, you want to make arrangements to carry on with homeowner insurance and property tax payments on your own as this has now become your responsibility. Most often lenders collect these payments and put them into an escrow account and then transfer the payments on to the proper places. Now that the mortgage is paid off, they will no longer be responsible for making these payments for you.

Related: 10 Questions to Ask Before Buying Homeowner's Insurance

Once you make the very last payment on your mortgage if there are any extra monies in the escrow account the lender will be sending them back to you. You need to make sure you inform your home insurance company that you will be making direct payments to them from now on.

You also want to make sure and check in with local authorities about the payment schedule for property taxes. Each locality will have its own time schedule for payments some are yearly, some are twice a year, and some are quarterly. You want to make sure you know when these payments are due.

For more information on purchasing a home in Omaha or selling your home in Nebraska or Colorado please contact us anytime.