Congrats! You’ve paid off your mortgage! Purchasing a home is one of the largest purchases you’ll likely make in your lifetime and so when you finally make that last mortgage payment it’s definitely reason to celebrate. While your financial commitments will indeed decrease, there are still a few things to note once your home loan reaches “$0.”
Ensure You Make the Right Payment Amount
Your last mortgage payment might differ from your normal monthly payments. Before making your last payment, or if you are hoping to combine a few payments, call your loan servicer to request a payoff quote. This quote will tell you the exact amount needed to pay your balance in full as well as the date the payoff is good through. If you can’t pay the balance before the payoff quote expires, make sure to request a new one as the amount due will change due to interest payments etc.
What Documents Show Your Loan is Paid in Full?
Each lender is unique in the forms they provide to homeowners upon loan payoff, however, common forms that show proof of payment include:
- Cancel Promissory Note: A promissory note is a document where someone agrees to pay something—like a mortgage. You may or may not receive this document when your loan is paid off. If you don’t, you will need other proof that your loan is fully paid.
- Mortgage Deed: A deed shows that your lender has a claim to your home if you stop making payments. When you pay off your mortgage, your servicer might not send this to you directly. Instead, they could send it to the government office where your original deed was recorded.
- Final Mortgage Statement: You can easily get a free final mortgage statement, which shows you’ve paid off the loan and don’t owe anything else. Keep this as proof of full payment.
- Loan Payoff Letter: Your loan servicer may send you a letter confirming that your loan is fully paid off. If they don’t, as long as you have other proof, you’re covered.
Time to Adjust Your Budget
It’s easy to forget the other financial commitments surrounding your home once you receive your final loan payoff letter. It’s important to remember that just because you no longer have a mortgage, you do still have costs associated with your home. Now is a great time to re-adjust your monthly budget, make sure to budget for things such as:
- Property Taxes
- Homeowners Insurance
- Home Maintenance
- HOA Dues
- Pest Control
- Landscaping
In addition to these costs your regular monthly budget will stay intact, these are just a few of the costs associated with homeownership that will continue even after your mortgage balance has been paid.
Now that your monthly budget has been re-assessed, you can start planning for the future. Whether your extra cash will go towards paying down other debts, saving for retirement, putting kids through college, etc. you will have the financial freedom to explore a new phase of life.
Are you ready to start the journey to homeownership? Contact us today to find the perfect place to call home!