What happens when you pay off your mortgage?

Are you getting close to paying off your mortgage? Congratulations, what a significant achievement in the life of a homeowner! If you have questions about what happens next and how to prepare before submitting your final payment, we’re here to help.

Once you’ve paid off your mortgage, your lender will start the process of reconveyance to remove the lien on your home’s title. A lien on a home gives someone a legal claim to a portion of a property for money owed. A mortgage lien is one of the most common types of liens.

Within a few weeks of your last mortgage payment, your lender will send a lien release to the record office of the county clerk where your home is located to release the mortgage lien. The lien release will also be sent directly to you if your state requires that you receive a copy. When a home has no liens or loans on it, it’s considered to have a clear title.

If you have an escrow account , you’ve only needed to worry about paying one bill per month. Your monthly mortgage payment is consolidated with your insurance premiums and property taxes. Property tax and insurance bills are sent directly to your lender, who pays them when they’re due. When your mortgage is paid off, your escrow account will be canceled. Note that if you have an escrow surplus, you’ll receive a refund check. Once your loan is paid off, you’ll need to pay your insurance and property taxes directly. There are four steps to take after your mortgage is paid off:

• 1. Check out your escrow statement

  Review your most recent escrow statement to get an idea of how much your projected insurance premiums and county taxes are for this year so that you can budget accordingly.

• 2. Alert your insurance company

  Insurance payments include homeowners insurance and potentially flood insurance. It’s up to you to reach out to your insurance providers to alert them that you’ve paid off your mortgage and request that the bills be sent to your address. You can choose to pay your premiums once a year or in monthly or quarterly installments.

• 3. Contact your county tax assessor

  From the day your mortgage is paid in full, it’s your obligation to pay your taxes on time. Contact your county tax assessor to request that your property tax invoice be sent to your address. Property taxes are usually paid twice a year, in advance.

• 4. Check your credit report

  The final step is to check in on your credit one to two months after you’ve paid off your mortgage. A free report is available once a year from each credit bureau. Fact-check your statements to ensure they show your mortgage has been satisfied.

If you have a loan with us and have questions about what happens after making your final payment, connect with a Guild customer service representative.