22W // Real Estate & Home Builders Guide // June 2016
I’ve paid off my mortgage. Now what?
By Ilyce Glink
and Samuel J. Tamkin
Tribune Content Agency
Q
: I paid off my mortgage
and would like to know
what actions I should take now.
Thank you in advance for your
assistance in this very important
matter.
: First, congratulations on
paying off your mortgage.
Paying off any debt is worthy
of a celebration. Paying off a
mortgage, especially if you’ve
owned the home for a substantial
period of time, say 15 or 30
years, is even more remarkable.
There isn’t much for you to do
now, other than make sure you
continue to pay your property
taxes and ensure that the lender
has removed the lien it placed
against your home when you got
your loan.
First, if your real estate
property taxes were paid as part
of the loan with a real estate tax
escrow, you’ll need to make sure
A
you start receiving the property
tax bill directly. Since you won’t
be making monthly payments,
the lender will no longer be
paying that bill on your behalf.
The good news is that the
lender likely kept extra funds
above and beyond what you
actually owed in taxes. And
someday (a couple of weeks
after your inal payment), you
should get that reserve back in
the form of a check from your
lender. Make a note in your
calendar to contact the lender if
you haven’t received these funds
four weeks after the payoff of
the loan.
The bad news is that now
you’ll need to set aside enough
cash for your property tax
payment and homeowners insur-
ance policy (if the lender was
paying that premium as well).
Since it can be dificult for most
people to come up with a lump
sum twice a year, we suggest
you open up a bank account
and deposit the same amount as
your mortgage each month until
you have enough to pay your
property taxes and homeowners
insurance premium. (You might
want to shop around with a
few lenders to see if you can
reduce your property insurance
premiums, if you haven’t done it
in a few years.)
Once your lender receives
the inal payoff amount from
you, the loan is paid off in full.
Lenders then need to prepare a
release deed or release of lien
to clear the title to the property.
The release, once recorded,
gives notice to the world that
you have paid off the loan and
that the lien the lender attached
to the property when you got
your mortgage is no longer
valid.
You should also receive back
from the lender the canceled
original note and the canceled
original mortgage that you
signed when you took out the
Hermiston
sears
HOMETOWN STORE
loan. Make sure you keep good
records so that you later don’t
get someone claiming that you
didn’t pay the loan off in full or
they claim you owe them money
on that same loan you paid off.
Be aware that lenders often
don’t send out release deeds
or release of lien letters, as we
think they should. But you can
call your lender and request that
the company prepare and send
out the release for recording.
The document must be recorded
at your local recorder of deeds
ofice, or at another ofice
charged with recording deeds in
the county in which the property
is located.
When you call the lender, ask
for the department that handles
the release of liens and then
ask how long it will take for the
lender to get the documents sent.
You may have to keep
checking with your local
recorder of deeds to ensure that
the release of lien gets iled. You
might be able to do this online,
as many recorder of deeds
ofices have put these public
records online.
One inal note: Make sure to
call your homeowners insurance
carrier and tell them that you
paid off the loan and that the
lender no longer needs to be
added as the lender on your
homeowners insurance policy.
Again, the hard part is over.
You’ve made your payments and
the house is now yours, free and
clear. And that, friend, is worthy
of a celebration.
(Ilyce Glink is the creator of
an 18-part webinar+ebook series
called “The Intentional Investor:
How to be wildly successful in
real estate,” as well as the author
of many books on real estate.
She also hosts the “Real Estate
Minute,” on her YouTube channel.
Samuel J. Tamkin is a Chica-
go-based real estate attorney.
Contact Ilyce and Sam through
her website, ThinkGlink.com.)
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