Things You Must Know About Paying Off Your Mortgage
This Blog On Things You Must Know About Paying Off Your Mortgage Was Written By Gustan Cho NMLS 873293
The Dream Of Every American Homeowner is paying off your mortgage earlier than the full 30 year mortgage loan term and have ownership of their home without any liens on their title. Most homeowners do think about owning a home that is free and clear of any mortgages, however, they then shrug it off as a fantasy and that it is not a realistic goal for them to have no mortgage on their home. However, there are the few goal getters who do have ambition and goals in having a home with no mortgages and those who consistently want to learn on things you must know about paying off your mortgage early. Homeowners who sets goals to pay off their mortgage loans earlier than the term of their home loans do deserve the credit for their hard work and bragging rights to have been able to accomplish this task where only a small percentage of homeowners have accomplished. Once homeowners have paid off their home mortgage early, that does not relieve them of their housing payments. They still have the responsibility of paying their homeowners insurance as well as annual property taxes on their own. Since they do not have a mortgage lender, their loan servicing company will not longer be paying their homeowners insurance and property taxes. This will be the responsibility of the homeowners.
Things You Must Know About Paying Off Your Mortgage Early
There are many things you must know about paying off your mortgage, especially when you are nearing the term. Many homeowners have devised their own strategies in figuring things you must know about paying off your mortgage before it is due. Here are some creative techniques where homeowners use to pay off their mortgage prior to the term date of the home loan:
- Some homeowners make semi monthly mortgage payments.
- Others may make extra payments each month to pay down the principal
- Many homeowners get themselves disciplined where they apply all of their work Christmas bonuses toward the principal of their mortgage balance
- Homeowners also use their IRS refund checks to pay down their mortgage balances every year
- Many homeowners make one extra mortgage payment each year towards their mortgage balance
- Homeowners make a few hundred dollars extra every pay period to pay down their mortgage balance
Things You Must Know About Paying Off Your Mortgage When You Are Nearing The Pay Off Amount Balance
- Ask for the final pay off amount balance about 60 days prior to pay off date
- Mortgage payments are normally paid in arrears
- Make sure that you have the final pay off amount and do not owe more than you think you owe because mortgage payments are paid in arrears
- For example, if a homeowner has a mortgage payment that is due this month and they pay their payment now for this month, this month’s payment is covering the previous months principal and interest payment.
- The interest clock is always ticking, day or night. Interest is added on every minute of every day.
- If you are one of those homeowners that have been paying extra housing payments than the minimum monthly due, you will be surprised when it comes out that you owe substantially less than what you have thought you owe on it.
How Do Homeowners Pay Off Their Mortgage And Get Free And Clear Title To Property
Homeowners were dependent on their mortgage lending servicing companies the entire time they had their home loans. The loan servicing company handled all customer service issues with regards to escrows, property tax payments, and homeowner insurance payments. The mortgage lending servicing provider took care of the homeowners accounting records which included the borrower’s mortgage escrow accounts and that the monthly housing payments that got sent out to the borrowers were accurate and were sent out on time. The loan servicing company also made sure that the borrowers homeowners insurance payments and property tax payments to the county was sent out in time to avoid any late payments or from it being in arrears.
Asking Mortgage Servicing Provider For Pay Off Amount
Once a homeowner is ready to pay off his or her mortgage loan balance, the borrower needs to contact their loan servicing provider the following:
- Homeowners/borrowers have the home loan serviced by the loan servicing department of their current mortgage company and/or a third party mortgage loan servicing company
- The Loan Servicing company’s role and responsibility is to make sure that they properly have the borrowers mortgage accounting records which includes escrows, balance, property tax information, and homeowners insurance information
- When a homeowner/borrower needs to pay off their current mortgage loan balance whether it is due to refinancing their current home loan or paying their current mortgage loan off, they need to contact their mortgage loan servicing provider
- Once the mortgage lending servicing provider receives the request from the borrower, the mortgage loan servicing company will start preparing the correct amount of the loan balance pay off amount as well as the credit the borrower has on his or her account in their escrow account.
- A payoff letter will get released by the mortgage loan servicing provider within seven business days upon the request of the payoff letter by the mortgage borrower.
- The payoff letter is going to state an amount that is the mortgage loan payoff amount and until what date that payoff amount is good until for.
- In the event if the amount is not paid off by that payoff date, there are additional amount due per day it goes beyond that payoff date where daily interest of the mortgage balance will be accruing.
- There are going to be servicing costs and fees on paying a mortgage loan balance off.
Fees And Costs On Paying Off Your Mortgage
As mentioned earlier, there are costs and fees in paying off your mortgage loan. Some of these fees are origination fees while other fees are third party fees and costs. Here are some of the fees and costs that are incurred with things you must know about paying off your mortgage
- Final principal and interest payment along with the balance of your mortgage loan.
- Mortgage borrowers needs to pay the recording costs and fees to the county registrar’s recording office which are the recording fees for releasing the home loan lien from the title to the property.
- Your mortgage lender may assess fees and costs such as mortgage processing fees, underwriting fees, doc preparation fees, wire fees, and other costs and fees.
- Title company will assess fees and costs such as title fees, document preparation fees, wire fees, notary fees, and title agent fees.
- Escrow account with their lender needs to be closed out.
- When escrow accounts gets closed out, funds needs to be emptied and zeroed out as well and the balance on the escrow account will be refunded to the homeowner within 20 days of the borrower’s mortgage loan payoff date.
- Homeowners should get a written confirmations of the release and closing of their escrow accounts.
- Make contact with the homeowners insurance provider and the county recorder of deeds officer to make sure that proper payment has been made to you and give them your mailing address for your refund check as well as to where to send all future bills since it will be your responsibility to pay your own homeowners insurance and property tax bills.
How Long Does It Take To Get Free And Clear Title To Property?
Homeowners need to realize that just because that they have paid off their mortgage balance and the mortgage statement shows zero payment does not mean that they own their property free and clear of any liens and debts. Here is the process works on getting free and clear title to your property:
- Homeowners will get free and clear title to the property once the county recorder of deeds officer will record the deed release request.
- The deed release can take anywhere between a few days to six or more weeks.
- A homeowner actually owns the subject property when they get the actual copy of the release of deed by the county recorder’s officer.
- The copy of the deed release from the county recorder’s of deed officer will reflect the date the deed was recorded along with the identification doc number from the county registrar and recorder of deed’s office.
- Ways of getting this release from the county recorder’s office and into the possession of the homeowners can be done via USPS or you can contact the county recorder’s office and ask if you can pick it up in person.
Make Sure That You Do Not Miss Homeowners Insurance Coverage And Not Get Assessed Late Fees On Property Taxes Due
Once you have paid off your mortgage in full and have no mortgage loan servicing provider, it will be your responsibility to pay your homeowners insurance and property taxes. Make sure that you contact your homeowners insurance company to let them aware that you have paid your home loan in full and that you no longer have a mortgage loan provider and the mortgage company is no longer the additional insured. Make sure to tell the homeowners insurance company to remove the mortgage lenders name off the homeowners insurance policy. The homeowners insurance provider will most likely request the copy of the recorded deed release request along with the copy of the deed to your home to make all of these changes.