What to Do After You Pay off Your Mortgage: These 10 Steps Make It Official

November 12, 2019

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Not sure what to do after you pay off your mortgage?

There are some important hoops you have to jump through to make this momentous occasion official. After all that hard work in paying your mortgage, let’s make sure you cross all your “T’s” and dot your “I’s”. The mortgage payoff procedure can be confusing!

I went through all of these steps a couple of years ago when our family paid off our mortgage early. It was surprising to me how many steps were required to simply pay off a freakin' debt. Nevertheless, we followed the “rules” so we never had to do it again!

Here are 10 steps that I went through for our mortgage payoff procedure.

1. Request a Mortgage Payoff Statement

I thought we could just send in the last mortgage payment and we’d be all set. Nope! Evidently, you need to call your mortgage company and verbally request a “mortgage payoff statement”.

Make this a fun moment for yourself! This is the first time you get to say to someone from your mortgage company, “We’d like to pay off our mortgage today!”

Don’t be surprised if the representative isn’t as enthusiastic as you are about it. Our rep was helpful and congratulated us on the big moment in our lives, but I could tell she wasn’t doing a happy dance like I was.

During your phone conversation, you’ll choose a “Pay Off Good Through Date”. This essentially means that you’ll need to send in your final payment prior to this date to not incur further interest charges. For reference, we made this phone call at the beginning of the month and set our “Pay Off Good Through Date” for the end of the month.

2. Pay Mortgage Payoff Fees

Depending on your state, there may be extra fees included in paying off your mortgage. For us, we had to pay a $30 “statement fee” and a $14 “recording fee”.

One last poke in the side from the mortgage company before they grant your freedom!

Mortgage Pay Off Statement
Our Mortgage Payoff Statement with $30 Statement Fee and a $14 Recording Fee

3. Obtain a Certified Check or Request a Wire Transfer

Mortgage companies may not accept a regular online payment or a personal check for the final payment. For us, we had the choice of either a certified check or a wire transfer.

We went to our local bank and requested a wire transfer. It hit our account almost immediately. When we got home from the bank, I checked online and it had a lovely $0 balance.

4. Inquire About Your Escrow Balance

Depending on when you pay off the loan, you will more than likely have an escrow balance containing funds for future payments to your homeowner’s insurance and property taxes.

Ask your mortgage company about your escrow current balance and how much you’ll be receiving back. For us, we received a check for around $2,000 two weeks after we paid off the loan.

Don’t go spending this money now! You’re going to need it to pay these bills manually now.

5. Contact Your Homeowner’s Insurance Provider

Now that you don’t have an escrow account anymore, you’ll need to pay your homeowner’s insurance going forward. For us, this was an opportunity for us to maximize our travel rewards earnings by putting our annual insurance payment on our credit card instead of paying through escrow.

Reach out to your homeowner’s insurance provider and let them know that you’ve paid off your mortgage and you’ll be making the payments going forward.

Ask them about automatic billing options so that you don’t accidentally miss this important payment each year.

6. Contact Your City or Township Office

Just like the homeowner’s insurance, your property taxes were paid through escrow as well. Now, you’re in charge of paying them.

Touch base with your city offices and let them know that you’ve paid off your mortgage and you will now be making your property tax payments.

Our township had a convenient online payment system that was pretty impressive for a government website!

$400,000 Home Paid Off in Less Than 4 Years
The Hill Family at the bank paying off their mortgage early!

7. Cancel Your Automatic Mortgage Payment

If you don’t cancel your automatic mortgage payment for the upcoming month, you may accidentally pay more than you intended.  Sign in to your online account and ensure you’re all set.

8. Adjust Your Budget Accordingly

Tracking your spending and saving is even more important now that you're mortgage free!

Plan a sinking fund for your homeowner’s insurance and your property taxes in your monthly budget. You don’t want these big-ticket items to surprise you down the road.

For budgeting our monthly expenses including our homeowner's insurance and property taxes, we love Mint. Besides Mint, there are dozens of other online budget apps that will help you keep track of your household expenses.

This is also a time to make some big decisions about this newfound money.

After Paying Off the Mortgage, What's Next?

Since my wife and I were making extra principal payments, we had an extra $2,300 to spend in our first month of mortgage freedom. It was a bit overwhelming for us!

We decided to allocate our extra money in the following ways:

Credit Card Rewards, Travel Hacking, Family Vacation
Here we are enjoying the sunshine in Cabo San Lucas

9. Receive an Official Letter from your (former) Mortgage Provider

Around 30 days after you make your final payment, you’ll receive an official letter from the mortgage company stating that your loan is paid in full. 

You’ll want to keep this one for your records. Or you could frame it like we did.

Frame or no frame, make sure you save it just in case. 

10. Obtain the Mortgage Release Documents

Your mortgage company will produce “mortgage release documents” that prove the mortgage is no more. Be sure to speak with your lender to understand when these documents will be sent to your County Clerk for processing.

You should also receive a copy of these documents that you’ll keep for your records. Depending on your specific situation, you may need to go to the County Clerk to get a copy yourself.

Final Thoughts on What to Do After You Pay off Your Mortgage

After all of these steps, make sure you celebrate this HUGE mortgage-free moment with your loved ones. Some people live with mortgages for their entire lives … not you. You’re mortgage free!

Here's how our crazy family celebrated:


Are you figuring out what to do after paying off your mortgage?

Please let us know in the comments below. There are a quite a few other folks just like you in the comments section.


Happy woman feeling free and happy

Andy Hill

Andy Hill is the award-winning writer, speaker and podcaster behind Marriage, Kids and Money - a platform dedicated to helping young families build wealth and thrive. Andy's advice and personal finance experience has been featured in major media outlets like Business Insider, MarketWatch, Kiplinger’s Personal Finance and NBC News. Trusted as a personal finance influencer and corporate financial wellness speaker by global brands like JLL, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys wrestling with his two kids, singing karaoke with his wife and watching Marvel movies.

46 Comments

  • Love it! Congratulations! I don’t escrow funds with my mortgage, but good advice regarding starting a sinking fund for your taxes and insurance. That’s what I do. Otherwise, the costs can really creep up on you!

    Reply
  • Holy cow!!!! I had no idea it was that complex…. Thank you so much for writing this up. I will be using it as a reference in the very near future! 😀

    Reply
    • Me too! I figured we’d send in the last payment at that’d be it, but nope!

      Reply
      • It’s not mandatory to make final payment using secure fund: bank check, wire transfer…. Just make payment using ACH.
        If could pay your principal balance with full projected (current statement) interest (Amount 1). If your mortgage processor sends paper to your local recording office (some does and some does not) then they will charge you this fee (no extra – $14). You can call/google recording office for this fee (Amount 2).
        Your final payment Amount 1 + Amount 2.
        $30 fee will be charge if you ask to for payoff statement.
        If you overpay then you will get your money back within 30 days after final processing.

        Reply
        • Great feedback Eugene! I’ve only paid off one mortgage and this was the process I went through.

          I’m glad to hear there are other ways of getting it done!

          Reply
          • Andy, I have a question. Does the mortgage payoff amount have to include the normal escrow payment as well? I don’t see why it should, since I plan to pay off the mortgage before the property tax and insurance are due.

          • I believe in my situation I did not have to include escrow (taxes and insurance), but every mortgage company is different. I would recommend contacting your mortgage company directly and asking them. It’ll be a fun call to have!

            “So … I’m about to pay off my mortgage and … ”

            Good luck!

          • We paid our mortgage off yesterday! Thanks for this post it was really helpful. Our mortgage was with Cenlar, the payoff letter came with very specific payoff steps and information that needed to be followed exactly to be credited properly. A wire transfer was required, the statement said that an ACH credit would be rejected. We are on the west coast and our payoff bank was on the east coast, so we wired the money the day before to be sure not to pay extra interest. That’s our story! Thanks again and still can’t believe we are now mortgage free!!

          • Congratulations Karin! What a load off of your shoulders!

            And thank you for including these details. It should help others who are looking in the comment section for inspiration and direction too.

  • Thanks – this information was really helpful especially the list of all of the entities we had to update. We just made our last payment and have started down the list of notifications. Thanks again!

    Reply
    • It’s time to party Ted! Way to go!! I’m glad the info was helpful for you. I figured that I better write it down somewhere!

      Reply
  • We are a payment or two away and we’d found out about the payoff request alreay, but your write up was very helpful! I assumed there would be a final fee gouge or two, but it was nice to see it wasn’t worse. Hopefully our gouges will be similarly modest. A belated congratulations and thanks a lot!

    Reply
    • Awesome Jeff! Way to go!

      I’m glad to hear you’re nearing the doors of mortgage freedom!

      If you want to share your win with my podcast audience (marriagekidsandmoney.com/mkmpodcast) when it’s all paid off, please contact me. It could inspire someone else to crush their mortgage too!

      Reply
  • Thanks Mr. Hill, the mortgage company was a little skeptical about me inquiring about my mortgage payoff statement in fact she suggest that I pay my February payment before I get a pay off statement which maybe less than my monthly payment Thanks for the information that I will be following in the coming months.

    Sheila

    Reply
    • Wow! It sounds like you’re ready to say goodbye to the biggest loan in your life. Congratulations!

      Reply
  • Great information, we are 3.5 payments from wrapping up our mortgage. We had no idea that there was work to be done after the last payment. Our lender is requiring us to call them just before the last payment is made (May, 2019) as I now realize they will likely add fees as noted in the article. Thanks!

    Reply
    • 3.5 payments away from MORTGAGE FREEDOM! That’s awesome news, Mark.

      If you want to share your good news with the listeners of my podcast in May, please let me know.

      Reply
  • Suppose you get no cooperation from mortgage company. First they send payoff letter. Payoff submitted timely. Mortgage company then asked for more to cover escrow account used for property taxes I’m skeptical because Consumer Financial Protection Bureau has sued them and mortgage company changed their name. dan

    Reply
    • Sounds shady Dan. If you’re skeptical in sending them more money, ask for more details.

      If you’ll be managing the taxes and insurance payments going forward, then why do they need more from you?

      Good luck! And congrats!

      Reply
  • Thanks for this! We’re about to pay off our mortgage this month (!) and Freedom Mortgage also happens to be our mortgage servicer, so it was really helpful to see exactly what this process looks like. Thanks again!

    Reply
    • What a perfect internet coincidence! Glad I could help!

      Enjoy that freedom 🙂

      Reply
  • Thank you for this great step by step information, it is much appreciated!

    Reply
  • I am ready to pay off now. 8 years ahead of time and this was a GREAT info so I know what to expect. I have 3 taxes per year and insurance escrowed. Since I will be paying off BEFORE any of the taxes are due I am going to see if they will use the 700.00 some escrow towards the pay off. If not, I will ask when I will receive my escrow funds back. I am so glad I stumbled upon your post.
    Kathy in Michigan

    Reply
  • Thanks for this great information. I paid my house off in 3yrs on September 2019. I followed your steps right before doing so and they were dead on accurate.

    Reply
    • Wow! 3 years is incredible!

      I’m so glad to hear that the article was helpful. Enjoy that MORTGAGE FREEDOM!

      Reply
  • I am dealing with the Executor for the Estate of my mortgage holder. Loan was on an Installment Note due in 5 years with a balloon payment. They agreed to a big discount if paid asap. Since there are no banks involved, is the process still the same?
    Any information is appreciated.

    Reply
    • Wow! This one is above my pay grade. I would highly recommend seeking out a trusted estate attorney. This will be well worth the cost.

      Reply
    • Very helpful, as I plan to pay my mortgage off this coming week. I did live on the water so I do intend to keep my insurance.
      Great idea for insurance payment.
      Thank you

      Reply
      • I’m glad to hear it helped! And way to go with eliminating your mortgage for good!

        Reply
  • I’m doing mine a bit differently….As I knew I was in the last year of payments, I cancelled the escrow account with the bank and paid my taxes myself with the escrow refund. The home insurance portion of escrow was cancelled last year and is now on auto pay monthly with a credit card to earn points, avoid being late or not having the money set aside. When I do my annual shopping to compare home insurance costs, the process to switch my insurance company is MUCH easier now that the bank is out of the equation. I will probably pay my last payment in the branch (wearing dark glasses, long sleeves, and a duffel bag) while I slip the teller my cash in an envelope and wisper goodbye

    Reply
    • Oh my god! Please take a video. This sounds epic!

      Smart move on the credit card points for the insurance. You can hit some bonuses straight away.

      Reply
      • Ok, I did it. Had to use the “drive thru” though because of the virus. My dark glasses and “go ahead, call the cops” t-shirt did not make a big impact…… I wrote a goodbye letter to Wells _argo and shoved it in the tube along with t-shirts for the employees that said F OFF. (this is why I call them Wells _argo) We all laughed at this, but there is no video tape at the drive thru. I am _inally _ree!

        Reply
        • Incredible! I’m sure that _elt good to say goodbye!

          Congratulations on your new freedom!

          Reply
  • The very last thing you need to do is call your home owner’s insurance company and have them remove the lien holder from your policy.

    Reply
  • Thank you Andy for the simple explanations. As I write this, I am about to be MORTGAGE FREE and starting the process to send my very last payment. It is sinking in and I cannot help the emotions to realize the dream is now REAL!

    Reply
    • Woo hoo! That’s awesome news, Oscar!

      Celebrate with the ones you love. Way to go!

      Reply
  • Andy thank you so so so much for the information! You and your family are such an inspiration. I had no idea about the extra steps I need to take after I make my final payment this month. Yay! My husband and I took 3 years + 1 month to pay off our house.
    So I called Freedom Mortgage today for my “pay off good through date” and my rep didn’t sound too enthusiastic either meanwhile I’m over here doing the Carlton dance all day long. lol

    Reply
    • haha! Yes, I was like jumping up and down in the kitchen and our rep was just doing her daily duties. It was funny.

      So happy that you have your Mortgage Freedom from Freedom Mortgage!!!

      Reply
  • I didn’t do mine quite right….. There were more fees than I had anticipated. $30 just to get the payoff quote. $20 for a 3rd party reconvey/release prep fee (whatever that is), $9 for calculated interest, then $20 for an expedite fee, because I didn’t want to wait for who knows how long to get the quote in the mail (I was sure the quote would be expired by then!). Then the shocker – $192 for a county recording fee. Really?? So, here’s the funny part. My bank lets me wire a maximum of $5000 ($30 wire fee). With the unexpectedly high recording fee, it bumped my payoff to $5015. I had not anticipated that. (I did this all on-line, because, you know, there are germs at the bank.) So I wired $5000 for the next day, then hurriedly called the mortgage company, and made a $15 payment, hoping to all heck the payment would post before the wire got there, as they told me they could reject the wire if it wasn’t paid in full. (I don’t know if that’s true, or not.) I was sure it wasn’t going to work. But it did!! The mortgage web site shows a $0 balance today, and they actually owe me $4. (Interest – as I paid it off before the quote expired.) Seems like it should be easy. But it’s hard! I was absolutely determined to pay the mortgage off THAT DAY. Probably should have taken it a bit slower. 🙂 Now I don’t know if they’ll send me the deed, or how that works, or what happens next. But for $192 I’m thinking they should hand deliver it.

    Reply
    • It’s amazing how many hoops you have to jump through!!

      CRAZY! You’d figure that it would just be the amount of your mortgage principal, but NOPE!

      Good luck with the final steps and enjoy that freedom!

      Reply
  • Hi I need to pay off my mortgage for other lending purposes and it is extremely time sensitive. I wired funds from my Chase acct to pay off my BofA mortgage on Aug. 11. It is now Aug. 17 and BofA still has NOT processed the wire. The funds left my Chase account on Aug. 11 and they have not rejected it or returned it. BofA mortgage dept currently has a 90+ min hold time to get thru to their rep but I’ve been calling them everyday. Their customer service is not very useful to say the least and they tell me something different every day (if I get through.. sometimes the rep accidentally hangs up after 2 hrs of hold time). My lender is asking for my zero balance statement, is there something (anything) I can do here other than helplessly call everyday?

    Reply
    • Wow! I wish I had some advice for you.

      If it were me, I would continue to call or physically visit a bank branch and get an answer.

      That’s horrible that you are going through this!

      Reply
    • I had something similar and two times payments did not go through. I had to call the load department and riddle me this. . the paperwork I have for an account number had one digit off that they dont tell you when you are paying online versus in the branch? I was baffeled by that .. They worked with me to fix it and was done in 15 minutes. Hopefully you dont have hidden account number at the end of your account too. This was such a pain.. tried to process two separate times no one ever said hey the last digit isnt correct. But the collections agent called and said Hey we have a problem.. I said “yes we do, lets fix it” and we did!

      Reply

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