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What Happens When I Payoff My Mortgage?

By Stacy Williams

Many homeowners, especially seniors and baby boomers are wondering ‘what happens when I payoff my mortgage’? Well, read on for an explanation of exactly what happens when you pay off your mortgage.

A mortgage is usually obtained by most homebuyers in order to purchase their home. If a homebuyer needs to borrow funds from a bank or other lending institution in order to purchase their home, they take out a mortgage loan so that they can finance their home. Mortgages are generally repaid by making monthly payments for a predetermined time frame such as fifteen or thirty years.
When you pay off your home loan you will no longer owe your lender any money. You will stop receiving your monthly mortgage statement requesting payment of your home loan and you will legally own your home free and clear.

How Does The Payoff Process Work?

• The first step is to contact your lender and request documentation stating you wish to pay off your mortgage balance. This paperwork is known as a payoff statement or satisfaction piece. Read it closely and contact your lender if there are any inaccurate facts on your payoff statement.
• After making your last mortgage payment your mortgage company should send you a promissory note and a deed of trust. Both of these documents should be stamped or have the words ‘paid in trust’ on them.
• Treat these documents like any other important paperwork. Make copies and keep the originals in a safe and secure location. This is your proof of payment, similar to a receipt.
• If you have your mortgage payment automatically deducted from your paycheck or checking account, make sure to cancel this arrangement.

What Else Should I Know?

There are advantages and disadvantages to having home mortgage loan. Once you pay off your mortgage you can no longer deduct the interest on the mortgage on your income tax return. This could result in an increase in your tax liability as you will no longer have the benefit of your mortgage offsetting your taxes. On the other hand, you will no longer have to worry being late with your mortgage payment will negatively impact your credit rating. If your mortgage was an adjustable rate mortgage (ARM) you will not have to worry about your monthly payment increasing.
A mortgage satisfaction is a legal document and should be filed at your county courthouse so that title companies will be able to verify that you own your home free-and-clear. Some mortgage companies will file the notice on your behalf while other lenders will leave that up to you. No matter whether the lender records the payoff or you do, make sure that you get back the original document with the filing date and time stamped on it so that you have proof of your mortgage payoff.

Related posts:

1. What Is The Early Mortgage Payoff Plan?
2. How Do I Get A Loan Modification On My Mortgage?
3. How Can I Payoff My Mortgage Loan Early?
4. What Is A Truth In Lending Statement For A Home Mortgage?
5. Is It A Good Idea To Payoff My Mortgage?