What to do when I finish paying my mortgage?

Once a person reaches pay the last installment of your mortgage loanIt’s time to sing victory! And it is that, at this point, he has already verified his debit balance (which is zero) and read that phrase that every mortgage debtor wants to receive in the last notification sent by his bank: “paid in full”. If this is your case, you may be wondering “what now?” What should I do when I finish paying my mortgage? Then we tell you everything.

Your financial life will begin to take another course. Think that that money that you paid in each installment, will now go to your savings account or even to something better.

What to do when I finish paying my mortgage?

When you finish paying your mortgage, you are closer to the end of a happy story. But still missing. There are a series of documents that you should receive by mail to consider yourself debt-free And in addition, there will also be some responsibilities that you will have to assume now that the bank has lost its lien on your house.

Although this process is carried out throughout the country, it varies depending on the state, the mortgage lender and the type of mortgage you have applied for. However, it will not be difficult to find the details once you have finished paying off the loan.

What to do when I finish paying my mortgage?

What documents do I get after paying the mortgage?

Let’s start by talking about what documents you should receive after paying off your home debt. Here, many consumers wonder what happens to the property deeds and, of course, if they will officially receive the title of the house. And you may be right. In fact, The first thing you should do after paying the mortgage is verify that the bank or lender has sent you a letter with several key documentsas the following:

  • The promissory note with the legend “cancelled”.
  • A satisfaction certificate issued by the lender.
  • The canceled mortgage or deed of trust.
  • A bank statement showing that the loan balance has been paid in full.

Now, let’s dive into what some of these documents mean. If you remember, when you asked for your mortgage you must have signed a promissory note Which, roughly speaking, stated your commitment to repay the loan from the bank or credit union in a certain number of years and at a specific interest rate, right? This is known as the mortgage document or deed of trusta kind of contract that gives your lender an interest and a legal right to your property.

This document should have been filed with the local land records office in the city or county where the house is located. The registration duty falls on the lender and is done once you apply for (and are approved for) the loan.

How do I get the deed to my house?

Once you have paid off the mortgage loan, the lender is required to send you the original promissory note in writing with the phrase “paid and cancelled” or something similar to this. This kind of legend is what explicitly indicates that you have taken over the debt and that you have paid it satisfactorily. At about the same time, the lender should have also sent a certificate of satisfaction to the real estate registry so that they can proceed to release the mortgage, remove the reserve marginal notes, and update the public records.

This is how the deed would end up showing that you are the sole owner of the home and that there is no longer any claim or reservation right over it. But nevertheless, You must ensure that this procedure is carried out effectively. Keep in mind that not all lenders carry out this process quickly and this could lead to errors or omissions that could cost you dearly in the future.

Another thing that can happen is that the lender mails you the satisfaction certificate instead of – or together with – your promissory note. If that’s the case, virtually the obligation to present these documents to the registry office now falls on you.

Tip: Regardless of the type of loan you have applied for and how much you trust your lender, We advise you to visit the public registry office to verify that the mortgage has been fully released and that there is no indication of any lien on the house.

Remember: If your mortgage included a line of credit, the lender may not pay it off right away, since you could still borrow money from the bank using your home as collateral. In that case -and if you do not want to use the line of credit- what you should do is contact the financial institution to ask them to terminate the contract.

What do I do if I did not receive the canceled promissory note or certificate of satisfaction?

If you have not received an email from the bank with your original canceled promissory note or certificate of satisfaction within a couple of weeks after payment, we suggest the following:

  • Contact your lender to request disclosure of the documents.
  • Obtain the original documentation related to the mortgage, the loan agreement and any other related data, communication or receipt; organize it all and save it in a file.
  • Check with your local registry office that the mortgage has been duly canceled so as not to bring you surprises in the future.

What am I responsible for now that I have paid off my mortgage?

When you closed on your home, your lender probably required you to pay an additional amount of money each month as security deposit. This money is usually set aside in a separate account and used to pay property taxes and insurance premiums. But now that you’ve paid off your loan in full, you’ll need to take on these responsibilities on your own.

Fortunately, your lender may have forced you to pay a slightly higher amount than necessary. Therefore, we recommend that you check to see if there are any excess funds left in that escrow account and ask your lender (if they have not done so voluntarily) to send you a check for that amount.

Tip: Whatever happens, be sure to ask your lender if there is any money left in the escrow account and, especially, the date on which the refund will be sent to you. Use that amount to deposit it in a savings bank account – preferably, a maximum yield – that will later be used to collect all the money related to real estate expenses, such as paying taxes.

Another tip that you can apply is to save that same amount of money each month in that account so that you always have a way to pay your taxes. Think that this amount should be easy to collect month after month.

Don’t forget to pay property taxes

Now that no lender is there to pay your property taxes, you will have to take care of it directly as required by the property tax laws of your state or county. Remember that not all states collect property taxes in the same way. Some only do it once a year, while others require a quarterly payment.

Investigate very well what is the procedure that applies in your locality and prepare a payment schedule so you don’t fall behind with none of them.

Update your insurance policy

As soon as you finish paying off your mortgage and get the deed to the home, contact the insurance company to let them know that you are the sole owner of the property. This is an extremely important step, as any policyholder is entitled to a payment in the event of a problem.

For example, if you don’t update this information and your property has claimable damage, the company may send the bank a portion of your money. Of course, you will be able to do the update process at that time, but it would take even longer and cause you a lot of inconvenience.

Tip: Set up future premium payments to be deducted from your own bank account automatically. It is also important that you evaluate if that policy suits you. If not, ask for some quotes from different insurers and change your insurance.

Some owners prefer to stop paying the policy because they consider that it is not necessary. If this is the case for you, remember that if someone falls onto your property or your pet bites someone, you could be found liable in a lawsuit. Think that this insurance is also designed to protect your investment. If a fire or earthquake leaves you homeless and you don’t have PMI insuranceyou could lose your property and everything that was inside it.

Note: This loss could be relevant if you are about to retire. That is why we recommend that you do not stop having a policy that insures your home. What you can do if you think the amount of the premium is too high is to ask the insurer to give you a discount.. Many companies offer discounts to people who have paid off their mortgage in full or are nearing retirement.

Now that you’ve got your financial life back on track and can save that money you used to spend on your mortgage, you need to make an important decision: what to do with that monthly surplus? The idea of ​​using these funds to renovate your electronic equipment or take a well-deserved vacation may be tempting, but think that you could use it in another way.

If you are looking for financial ideas so as not to waste money, we leave you three tips that you can implement:

Use that surplus to pay your debts

Now that you no longer have the mortgage debt in tow, you could use the money that you spent month after month to pay the loan to catch up on all your debts. Start by paying off those that are subject to a high interest rate, such as credit card balances. Once you finish paying them, move on to the next debt and so on until you finish paying everything completely.

While saying goodbye to your mortgage loan payment is liberating, you’ll feel even better about being debt-free.

Strengthen your emergency fund

Each family should have an emergency fund that acts as a safety net against any unforeseen event. The money in this fund can help you pay for an unexpected medical bill, a fairly expensive home repair, or even live four to six months without problems if you lose your job.

If you don’t already have such a fund, open a high-yield savings account and start building! This emergency fund should be equal to four to six months of family income.

Note: If you already have an emergency fund, fortify it with more money. He thinks that having an amount of cash large enough to live about eight months without a job will be much better than six.

Put it toward retirement or other investments

If you’re already up to date on debt and have a robust emergency fund, your next financial priority should be secure retirement fund. If you haven’t already, use the extra money to maximize your annual contributions to the IRA account.

Individuals under the age of 50 can invest up to $5,500 in a Roth or traditional IRA, and up to $6,500 if over 50. If your employer offers a 401(k) program and matches your contributions, be sure to set an amount that is high enough to take advantage of.

If you prefer, in addition to securing your retirement savings, you can strengthen other investment and savings instruments that interest you, such as:

  • Increase funds to replace your vehicle with a new one.
  • Save in an account to go on vacation with the family when you retire.
  • Pay your children’s college tuition.

When all of your financial priorities are in order and you’ve effectively paid off all debt, it’s time to reward yourself for meeting your financial goals. You can take a trip with your loved ones or get involved with a charity that works for something that is meaningful to you. Remember that you have worked very hard to get here: now it is time to sit back and enjoy your triumph.

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