How to Pay Off Your Mortgage the Right Way


Paying off your mortgage is an exciting financial milestone. But, are you prepared to do it properly? Here’s a simple checklist to guide you through the process.

couple in front of house1. Request a “Payoff Statement” from your lender to let them know you plan to pay off the loan and verify repayment guidelines.

2. Request a “Satisfaction of Mortgage” letter. Once you have made your last payment, request a “Satisfaction of Mortgage” letter from your lender. The lender will send you a letter verifying the mortgage is paid in full, along with the original promissory note and a deed of trust. The documents will be stamped “canceled” or have the words “paid in trust” on them. Make copies and keep the originals in a safe and secure location. This is your proof of payment.

3. Ensure that mortgage papers are filed with your city or county office. The lender will release the lien on your property by sending a mortgage release or release of deed of trust to the office that records property documents where you live. The title will be revised to show that the home is no longer mortgaged. Verify that this has all been done.

4. Check on your property taxes. If your property taxes were paid as part of an escrow arrangement, you will need to pay this bill on your own once your mortgage is paid off. Contact the county assessor’s office or your city or county tax office to ensure billing records are updated.

5. Make sure your escrow balance is returned. If you paid into an escrow account that your lender used to pay your taxes and insurance, you might have a balance in that account after you pay off your loan. The balance will be returned to you.

6. Contact your homeowner’s insurance company to update your records. Remove the lender’s name as an additional insured on the policy. If your lender was paying insurance premiums on your behalf through an escrow account, update the billing records to show that you will now make the payments on your own.

7. Prepare for a change in tax liability. Once you pay off your mortgage you can no longer deduct the interest on the mortgage on your income tax return. This could result in an increase in your tax liability.

8. Cancel any automatic deductions. If your mortgage payment was automatically deducted from your paycheck or checking account, make sure to cancel this arrangement.

9. Tidy up. Review your estate plan and will. About a month after your final payment, a free check of your credit report at should show that the balance outstanding on your loan is zero.

For more helpful guidance related to home loans, refinancing, and unique borrowing solutions, contact a loan advisor near you.

By Amy Malloy