Congratulations! You’re on the brink of paying off your mortgage. The journey of countless payments is almost at its end, and financial freedom is within reach. But before you pop that champagne cork, there are seven essential steps you need to take to seal the deal. These steps are crucial and, unfortunately, not as straightforward as making that last payment and walking away. Let’s dive into the process that will lead you to complete ownership of your home.
1. Request a Payoff Statement
The first step in this journey is to request a payoff statement from your mortgage service provider. This document is mandatory and provides crucial details like the good-through date, which is your deadline for financial freedom. Keep in mind there might be a fee associated with this request. In my case, it was an additional $30. This fee is usually added to your final payoff amount. As trivial as this fee may seem, it’s a necessary step to take.
2. Choose Your Payment Method
Once you have your payoff statement, you’ll need to decide on your payment method. Contrary to what you might think, the usual payment methods such as automatic payments or checks won’t suffice for your final payment. You’ll need to choose between a certified check or a wire transfer. I personally opted for a wire transfer as it felt more secure and quicker. Note that there will likely be a wire transfer fee charged by your bank, so be prepared for this additional cost.
3. Check Your Escrow Account
As you’ve been paying your mortgage over the years, part of your payment likely went into an escrow account that covers property tax and insurance. Once you pay off your mortgage, you might have a balance remaining in this account. The good news is that you’ll receive a refund for this balance. However, resist the temptation to spend this money frivolously. You’ll now be responsible for paying your property taxes and insurance directly, so it’s best to set aside this money for those future payments.
4. Prepare to be an Actual Homeowner
With your mortgage paid off, you’re now the full owner of your home, and with that comes new responsibilities. Contact your home insurance company and local property appraiser to let them know you’re mortgage-free. They will need documentation, such as the satisfaction of mortgage or lien release, to update their records. This ensures that your insurance and tax bills will be sent directly to you, preventing any possible delays or issues in the future.
5. Cancel Automatic Mortgage Payments
The last step in this process is to cancel any automatic mortgage payments you might have set up. This is a crucial step to prevent any unnecessary payments and headaches in the future. Once you cancel these payments, you’ll be able to fully enjoy the extra money in your pocket each month. Use it wisely, whether that be through investing, saving, or spending on things that bring you joy.
Conclusion: Enjoy Your Financial Freedom
Paying off your mortgage is a significant milestone that deserves to be celebrated. But remember, the journey doesn’t end with the last payment. By following these essential steps, you’ll ensure a smooth transition into mortgage-free living. And once you have that mortgage release statement in hand, don’t forget to frame it. It’s a testament to your hard work and dedication, a trophy that symbolizes your newfound financial freedom. The extra money that you used to put towards your mortgage is now yours to invest, save, or spend as you please. The choice is yours, and the possibilities are endless. What will you do with your extra money? The ultimate freedom awaits!