Lien Release: Getting Ready for Your Final Mortgage Payoff (Woohoo!)

Are you closing in on the day you finish paying off the entire mortgage? Or just wondering what that finish line looks like?

What steps do you need to take to get that lien off, and own the home free of debt?

Let’s take a look.

The Final Steps to the Lien Release

Oh, happy day! You paid it all off. You’ve just received a “confirmation” email from your lender.

Helpfully, you find that the email gives you an outline of how to wrap up your mortgage obligations for good.

Here are the steps you can expect to make to arrive at this fabulous process…and continue right through to the official recording of your new homeownership documents.

• Call the mortgage company to request the payoff amount. The agent will give you the information you need for handling this final payment. Ask for a payoff amount that’s valid until a specific date. (Your mortgage company might offer a by-date calculator on your account page.) Another option: Pay the mortgage all the way down to less than the final month’s payment, and let your final payment resolve the debt. This doesn’t have to be a perfect science. You’ll get an escrow overage refund for any amount you might have overpaid.

• Send your payoff funds. (See the “Payment Procedures to Know” section later in this article for some details, considerations, and safety notes.) It seems obvious, but do save documentation of your final payoff activity. Once you make the final payoff, the lender stops paying taxes and insurance out of the escrow account.

• Turn off the autopay feature on the account. Many people follow the progress of their home loans online, and set up automatic monthly payments. Your lender might turn off autopay for you at the end of the loan. Check that. And while you’re on your mortgage account’s webpage, be sure your mailing address is up to date. You’re about to be mailed some important papers!

• Call your local tax department. Let the property tax office know you’ll be paying the taxes yourself, and get the due date for submitting your next payment. You want to let the office know that the lender is no longer the proper recipient of your tax bills. Your tax department likely has a secure website for payments. You might wish to check your tax bill for an early payment date with a discount.  

• Call your homeowner insurance broker. Inform the agent that you’ve paid off your home loan. Review your policy’s coverage to be sure it’s still optimal for you. Ask about any discounts that may apply after the lien release. Also, check that the mortgage lender is taken off your insurance policy as the named secured party. 

• Check your accounts and set reminders. Your former lender won’t be submitting your homeowner insurance premiums out of your mortgage escrow any more. You have to pay them directly. Don’t miss any property tax or homeowner insurance payments. Be sure to look up the deadlines that apply to you. Keep ample funds in your account to pay your property taxes and insurance charges when they come due. Ensure that they send statements to your address.

• Inform your homeowner association. If your house, townhome, or condo is part of an HOA, give your property manager a call. Let the manager know that the mortgage company is now off your title. This is a good time to ensure that you’re paying your monthly HOA fees. Your management company may have an online portal you can use to set up autopay for all HOA-related charges.

• Speak with your tax expert, if applicable. If you have been itemizing deductions and taking a tax break for mortgage interest, remember that your tax return will change next year. 

• Sign up for deed claim alerts. Check the website for your home county Recorder of Deeds. You may have an option on the site to enter your email address for alerts if anyone tampers with (puts a claim on) your deed. Once no lender is watching over your deed, you’ll need to apply a new level of caution. Fraudsters find paid-off mortgages very attractive.

Did you purchase a title policy when you closed on your home? If you do have a title insurance policy, know its whereabouts in case you need it in the future.

Mortgage companies direct home buyers to carry a lender’s policy. The owner’s policy is optional, but recommended.

Nuts and Bolts of the Recording Process

Once you’ve handled the final payoff, the loan company will send your key documentation to your county’s Recorder of Deeds. This action will end the mortgage and release the lien from your title, with a satisfaction of mortgage document or a deed of reconveyance.

This is a deed process. So, it’s done in the county where the home is, at the office of the Recorder of Deeds.

The time it takes to have a reconveyance recorded depends on your county’s process, but deadlines are set forth in your state’s law. Generally, you can expect everything to be done within about two months. Ask your mortgage company to tell you the basic timeline. When the timeline is finished, check that the mortgage company’s lien was indeed removed. Your county clerk or recorder’s office might offer a web portal, showing you the activity on your deed.

Once the key legal documents get recorded, then the county returns the documents to your mortgage company. Next up, the mortgage company will send copies to your address under a cover letter.

Payment Procedures to Know

Whenever you have legal instruments recorded with your county, there is likely a fee. This is true for a mortgage release. But you might not notice this. Your fee for the county’s removal of the lien from your title will likely be covered by the lender and taken out of your refund.

When you ask the mortgage company for the final payoff quote, you may receive a secure file containing the payoff letter along with directions for wiring money. Use caution with any file that comes by email. Do initiate a call to your bank or credit union, using the number on its website (not in the email). On the phone, verify the wiring instructions.

Your successful payoff should come through on your credit report within 60 days. The mortgage company will report your good news to TransUnion, Experian, and Equifax.

All of that said and done, the mortgage company won’t just delete you from their site. Ask how long the company will keep your account active so you can review your statement and payment history.

And That’s the Lowdown…

…On getting the mortgage paid off in full. You can apply to borrow against your home in the future, of course. A reverse mortgage could be just what you need to fund a new project!

Note: This article is not financial or tax advice. For guidance customized to your situation, consult with your hired professionals.