Paying off your mortgage -- what's the procedure?

[dr.girlfriend]

Approximately 20-ish years ago, I posted on The Knot Money Matters board that I wanted to buy a house, and the wonderful women over there -- some of whom I still see on here today -- basically told me I was dreaming and I was in no position to buy a house right then.  And I was very grumpy about it at first but then I got my sh*t together started paying a hell of a lot more attention to finances and bought a house that we moved into sixteen years ago TODAY based on just my salary.  And thanks to MM I refinanced twice ending up with a 2.75% 15-year in 2012, and I just checked today and I have about $20k in principal and less than a year until I pay this thing off in full.

SO, what comes next, when we finally pay off this thing?  I get that we stop our automatic bank draft.  And then we're responsible for paying our own insurance and taxes.  Is there a company you can pay to do something escrow-ish or does everyone just manage it on their own?  

Anything else I'm not thinking of?  Do we need to do something with the county to record that the mortgage is paid off?

Anyone do anything fun to celebrate? 

[chpmnk1015]

Woo hoo! We haven't reached that step yet..just want to say congrats!

And I plan on throwing a party when I pay this off...haha..not really bit drinks w a couple like minded money friends lol

[heygrey]

Congratulations on being so freaking close!

I don't know the actual logistics of how you pay insurance and taxes in your state/region, but they are not held in escrow for us in Canada so I just make a monthly payment to myself in a savings account and pay the bill when it comes due. It's as easy as any other yearly bill we have.

[RockNVoll]

Congrats on being on the cusp of such a huge milestone!

We've never paid off a house (and possibly never will) but we don't escrow our insurance or taxes and just pay them when they come due like any other bill.

[tacokick]

The mortgage company might send a copy of all the info (canceled promissory note, updated deed of trust, certificate of satisfaction etc) to the county clerk themselves. Or they might send it all to you and you have to file it yourself to update the info.

Then you should start getting the tax bill sent directly to you.

You notify your insurance and they will start billing you directly.

[simpsongal]

I don't know but just wanted to say CONGRATS!! I'd probably do a dinner out or something to celebrate.

[lolalolalola]

Congrats! We will be paid off in November and I am so freaking excited! I have had a mortgage payment since I bought my first condo as a single person in 2001.

We are Canadian and we already handle our own property taxes and insurance so that’s no change for us. I believe we just need to remove the bank from the title of the home and our insurance policy. That’s done through a discharge process which requires a lawyer to file some paperwork with the titles office.

[clairebear]

Congrats on almost being done with a mortgage!! We paid ours off last year when we got down to about 20kish. I just couldn't take it anymore so I went into the bank and asked the teller for the pay off amount. Then I made a payment for that amount which the teller drafted from my checking account. It was sorta anti climatic. I kinda wanted a ticket tape parade, but all I got was, "have a nice day!". You don't need to do anything else. The county will record the release of the mortgage automatically. I'm assuming the lender sent the county something. I know I didn't have to do anything. From there all I had to do was to remember to pay my insurance and taxes myself. I wouldn't try to escrow. We pay it as a lump sum once a year. Our insurance allows credit card payments with no fee so we get a ton of points that way. And taxes can be paid online, super easy. We didn't tell anyone....H's family is terrible with money and we didn't want them thinking we had money to give to them now that we didn't have a mortgage payment. And honestly, I still feel like I have a mortgage payment sometimes. Between taxes and insurance we pay almost $1000 a month. When we moved in the house 13 years ago our mortgage with taxes and insurance was $1100. 

Enjoy being debt free! It's nice knowing you don't owe anyone anything. 

[babsbunny]

You'll get the title. Make copies and find a safe place for the original (maybe a safe deposit box or fireproof safe).

Save up during the year so you can pay your own property taxes and insurance.

Prepare to live there forever because now you might never want a mortgage again.

Congrats!!!

[flatlan]

Congratulations on being so close! It’s a great feeling to pay off a mortgage!

[flygirl]

That’s so great to be that close!

We’ve been paying our own insurance and taxes vs escrow since we last refi’d. I would just notify your insurance carrier that you’ll need to get the bill vs the escrow company if you’re not already receiving it. I pay my property taxes online on the county website which is super easy.

I don’t know if your area has this or how old your house is, but in certain parts of our metro area they actually have “titles” that you’d need to bring to the county so they can record that your property no longer has a lien. A lot of properties that are new or newer cities (like after the 90s) don’t have that anymore, they just do it all electronically at the county.

Congrats! I’d go out to a nice dinner to celebrate! I’d probably burn a COPY of the paid off letter too just for fun 😜

[dr.girlfriend]

Aug 29, 2024 12:05:12 GMT -5 flygirl said:

That’s so great to be that close!

We’ve been paying our own insurance and taxes vs escrow since we last refi’d. I would just notify your insurance carrier that you’ll need to get the bill vs the escrow company if you’re not already receiving it. I pay my property taxes online on the county website which is super easy.

I don’t know if your area has this or how old your house is, but in certain parts of our metro area they actually have “titles” that you’d need to bring to the county so they can record that your property no longer has a lien. A lot of properties that are new or newer cities (like after the 90s) don’t have that anymore, they just do it all electronically at the county.

Congrats! I’d go out to a nice dinner to celebrate! I’d probably burn a COPY of the paid off letter too just for fun 😜

Thanks, the house was built in the 1950s so I think it would probably be one of those situations with the titles. 

I think the taxes thing is what I'm most worried about.  Right now we get copies of bills mailed to our house but only once a year and since we don't have to pay them I'm not sure exactly when.  I better find out and make sure it's super clear in my calendar -- they are usually the size of a postcard and I can see them getting overlooked!  I think there's usually one for school taxes and then a separate one for the whatever other property taxes.

[heygrey]

dr.girlfriend, I know it varies by county/state, but we can pay our taxes with a credit card so I look forward to those points every year. I save monthly to a HYSA so I earn the interest on the money that would be sitting in escrow. Small victories, but it does add up.

[mlkgls]

Congratulations! How exciting to be so close to the finish line.

I’ve paid my own insurance and taxes since the last refinance and it’s so ridiculously easy I only wish I had done it sooner. I have a rough idea of the expected annual combined total and transfer a monthly amount into a dedicated account. (Insurance, and taxes to a lesser extent, have skyrocketed so it’s the same amount as my mortgage sadly.) You’re on MM, so this is likely a given, but treat it like you would any other monthly bill.

Obviously, this will vary locally, but my tax bill is sent out mid October and is “due upon receipt”, but not considered late until after January 31st of the next year. We can technically pay with a card, but the convenience fee doesn’t make it worth it. Thankfully, I can pay my insurance with a card and accrue those rewards!

[livinitup]

Congratulations

To pay taxes and insurance, it’s about what you would expect:
- We have auto pay set up to make a monthly payment to the insurance company. I think it’s required quarterly, so we are paying ahead a little bit but it’s easiest to just make it part of the monthly payment flow. (You may want to check that you have enough insurance coverage. It sucks, but you may want to up it if the value of your home has increased a bunch, it’s actually not that expensive to get more coverage. Go figure.)
- Annually, we get a tax bill the first week of September, it comes in the mail. We have to pay it by the end of the month. So, we move the amount into checking. I am super duper modern and drive a check to the town clerk office and get a receipt. It’s stamped as received. I save the receipt. Every year but 2020 they have a candy bowl at the window and I take 2 pieces of candy. One for me and one for H. We call it our expensive candy.

[dr.girlfriend]

Aug 31, 2024 22:32:17 GMT -5 livinitup said:

Congratulations

To pay taxes and insurance, it’s about what you would expect:
- We have auto pay set up to make a monthly payment to the insurance company. I think it’s required quarterly, so we are paying ahead a little bit but it’s easiest to just make it part of the monthly payment flow. (You may want to check that you have enough insurance coverage. It sucks, but you may want to up it if the value of your home has increased a bunch, it’s actually not that expensive to get more coverage. Go figure.)
- Annually, we get a tax bill the first week of September, it comes in the mail. We have to pay it by the end of the month. So, we move the amount into checking. I am super duper modern and drive a check to the town clerk office and get a receipt. It’s stamped as received. I save the receipt. Every year but 2020 they have a candy bowl at the window and I take 2 pieces of candy. One for me and one for H. We call it our expensive candy.

Thanks!  We did up the insurance when we built our addition -- we spent more on the addition than they said the whole house was worth and I wanted to be sure we could actually rebuild if needed. 

I will be more vigilant when we get this year's taxes to mark when and where they come from so we can be alert.  Thanks, everyone!

[Susie]

Aug 26, 2024 19:36:26 GMT -5 dr.girlfriend said:

SO, what comes next, when we finally pay off this thing?  I get that we stop our automatic bank draft.  And then we're responsible for paying our own insurance and taxes.  Is there a company you can pay to do something escrow-ish or does everyone just manage it on their own?  

We don't escrow taxes/insurance with our mortgage, so I can speak to this piece.  I manage it on my own.  I have a monthly automated transfer set up into a savings account.  I calculate

(annual homeowners' insurance premium, due in May)
(annual property tax amount, due in Jan)
(annual school tax amount, due in Sept)
(annual car insurance premium, due in June)
(annual umbrella insurance premium, due in June)
___________________________________

Total

Then divide that total by 12 and that's how much I transfer each month.  It's all automated, I just update the amount of the automated transfer each time one of the above costs goes up.  Obviously the car and umbrella insurance line items aren't part of a mortgage escrow, but it's easiest for me to lump it all together, since they are also annual payments.  I pay the home policy premium via credit card (yay points!) through the carrier's website, just like my auto and umbrella through the same carrier.  In your case once the lien satisfaction is recorded you'll need to update the policy to let them know to send bills to you instead of your lender.  For school/property taxes I would call your jurisdiction and check with them on what you need to do to get the bills mailed to you instead of your lender.  E.g. in our area the lien satisfaction would be recorded in the county records, but the town and school district issue the tax bills and I don't think the update happens automatically even after recordation of the lien satisfaction.  We get our tax bills around the beginning of the month in which they're due at the end of month, and I pay them with personal check.  There are online payment options, but they charge a convenience fee.

As far as recordation of the lien satisfaction, your lender should record that for you, but you'll want to keep an eye out and make sure it happens within the month or two after the loan is paid off.  You'll also want to keep a copy.  It will work the same way as when you refi'ed in the past, and the new lender paid off the old loan.

[sillygoosegirl]

Congrats! I think we have about 3 years left.

We opted out of escrow from the beginning. We set up automatic monthly transfers to a sub-account at our credit union specifically for property taxes and homeowners insurance. We transfer money back from that account to checking annually when those bills are due. I believe we set our mortgage up as an auto-debit, so I think when it's paid off, the mortgage company just stops debiting our account and we don't need to actually do anything.

I'm hardly an expert, but I think the house was legally yours from closing, and the bank just had a lean on the house. I don't think there is anything to file because the house isn't changing hands, the lein just goes away because you don't owe anything. At least that's how I think it works.