Mortgage Payment in Full: What Must You do?

May 17, 2004, Revised August 31, 2006, January 29, 2009, Reviewed August 28, 2011

“What exactly must I do when my mortgage is paid off to assure that all records have been adjusted properly?”

After you have made the last payment, you should receive a "satisfaction of mortgage" from the lender, along with your note. This is all the evidence you need that your loan has been paid off. If you don’t receive these documents, contact the lender, but give him a few weeks at least.

If you are paying off before term by making an extra payment, you can’t just send the lender a check, even if you know exactly what the payoff amount is. Lenders have procedural rules about payoffs and you must follow them.

Another reader recently wrote me about her experience. She called the lender to find her balance, calculated interest through the day of payoff, and sent the lender a check. When she examined her account on the internet some days later, however, the payment had not been credited. So she called again.

She was told that the last payment, no matter what the amount, had to be a cashier's check or direct funds transfer; it had to be mailed to a different address; and it had to include an additional $50.00 to reimburse the lender for a payoff statement and for handling the paperwork at the county deed register office. Had she not called, she would have been delinquent.

The moral: before proceeding with an extra payment designed to eliminate the mortgage, call the lender to learn the drill.

You must also make sure that a satisfaction of mortgage has been filed with the county where your mortgage was registered so that it no longer appears on your property record. State laws differ and lenders are not always responsible for clearing the mortgage lien from your property. Check with the county, but if it is the lender’s responsibility, give it at least 6 weeks to happen before raising a fuss. If it is your responsibility, you may have to make a special trip to the country deed register office, and perhaps pay a separate fee. If your taxes are escrowed, you must also notify the tax office or offices that henceforth tax notices should be sent to you. 

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