Consumer law -- what to do after you have paid off your mortgage?
June 13, 2014
ROCK ISLAND ARSENAL, Ill. -- (June 13, 2014) Congratulations! You have just paid off your home mortgage. All done, right? Well, sort of. There are at least five key steps to insuring your mortgage free future is a bright one.
First, get a "Satisfaction of Mortgage Statement." This is proof that your lender paid off the balance of your loan with your last regular payment or your bulk payment. This is the key document to have in your possession and should be kept with all of your important personal papers like your will, power of attorney, birth certificates, passports and the like.
Second, make sure that your "Satisfaction of Mortgage Statement" is properly filed with your county's Register of Deeds or Recorder of Deeds office. You may have to do this yourself. Make sure that any tax stamps and recording or copying fees are paid. The Satisfaction of Mortgage statement may originate in another state; this is because your loan may have been sold as commercial paper to a bank or mortgage company in any state of the United States. Don't let this fact throw you off. This Satisfaction of Mortgage Statement also needs to be filed in the county of your residence where your home is located.
Third, cancel any automatic deduction plan. If you have a bi-weekly or any automatic or extra deduction payment plan make sure that you have canceled the plan. This may or may not be from your bank as several independent organizations can provide this service.
Fourthly, make sure your home owners insurance and real estate taxed get paid. Remember your old friend PITI or principal, interest, taxes and insurance? Well your payment diligence has paid off and you have finished off the principal and interest. You still have to pay your insurance and taxes on your home castle. You may want to put these on a payment schedule so you can budget for them. Letting your insurer know about your new status and rechecking your home insurance including casualty and flood insurance needs is a good practice
Fifthly, make sure you get your escrow from your PITI that was used to pay taxes and insurance. If you haven't received this check by the three week mark it is wise to check with your lender.
Finally, recalculate your budget. What are you going to do with the money that would have paid the mortgage? Do you need a better emergency fund? Do you need to save more money for retirement? What about college costs for your children? All nice questions to answer for a family with a paid-off mortgage.