Ready to Pay Off Your Mortgage? Remember These 10 Important Steps

Man standing on top of a mountain celebrating

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So you’re ready to pay off your mortgage?! Congratulations!

There are some important hoops you have to jump through to make this momentous occasion official. After all that hard work in paying your monster loan, let’s make sure you cross all your “T’s” and dot your “I’s”.

I went through all of these steps a couple of years ago when our family paid off our mortgage early. It was surprising to me how many steps were required to simply pay off a freakin’ debt. Nevertheless, we followed the “rules” so we never had to do it again!

Here are 10 steps that I went through to help my mortgage pay off become the real deal:

1. Request a Mortgage Payoff Statement

I thought we could just send in the last mortgage payment and we’d be all set. Nope! Evidently, you need to call your mortgage company and verbally request a “mortgage payoff statement”.

Make this a fun moment for yourself! This is the first time you get to say to someone from your mortgage company, “We’d like to pay off our mortgage today!”

Don’t be surprised if the representative isn’t as enthusiastic as you are about it. Our rep was helpful and congratulated us on the big moment in our lives, but I could tell she wasn’t doing a happy dance like I was.

During your phone conversation, you’ll choose a “Pay Off Good Through Date”. This essentially means that you’ll need to send in your final payment prior to this date to not incur further interest charges. For reference, we made this phone call at the beginning of the month and set our “Pay Off Good Through Date” for the end of the month.

2. Pay Some More Silly Fees

Depending on your state, there may be extra fees included in paying off your mortgage. For us, we had to pay a $30 “statement fee” and a $14 “recording fee”.

Mortgage Pay Off Statement
Our Mortgage Payoff Statement with $30 Statement Fee &$14 Recording Fee

One last poke in the side from the mortgage company before they grant your freedom!

3. Obtain a Certified Check or Request a Wire Transfer

Mortgage companies may not accept a regular online payment or a personal check for the final payment. For us, we had the choice of either a certified check or a wire transfer.

We went to our local bank and requested a wire transfer. It hit our account almost immediately. When we got home from the bank, I checked online and it had a lovely $0 balance.

4. Inquire About Your Escrow Balance

Depending on when you pay off the loan, you will more than likely have an escrow balance containing funds for future payments to your homeowner’s insurance and property taxes.

Ask your mortgage company about your escrow current balance and how much you’ll be receiving back. For us, we received a check for around $2,000 two weeks after we paid off the loan.

Don’t go spending this money now! You’re going to need it to pay these bills manually now.

5. Contact Your Homeowner’s Insurance Provider

Now that you don’t have an escrow account anymore, you’ll need to pay your homeowner’s insurance going forward. For us, this was an opportunity for us to maximize our travel rewards earnings by putting our annual insurance payment on our credit card instead of paying through escrow.

Reach out to your homeowner’s insurance provider and let them know that you’ve paid off your mortgage and you’ll be making the payments going forward.

Ask them about automatic billing options so that you don’t accidentally miss this important payment each year.

6. Contact Your City or Township Office

Just like the homeowner’s insurance, your property taxes were paid through escrow as well. Now, you’re in charge of paying them.

Touch base with your city offices and let them know that you’ve paid off your mortgage and you will now be making your property tax payments.

Our township had a convenient online payment system that was pretty impressive for a government website!

$400,000 Home Paid Off in Less Than 4 Years
The Hill Family at the bank paying off their mortgage early!

7. Cancel Your Automatic Mortgage Payment

If you don’t cancel your automatic mortgage payment for the upcoming month, you may accidentally pay more than you intended.  Sign in to your online account and ensure you’re all set.

8. Adjust Your Budget Accordingly

Tracking your spending and saving is even more important now that you’re mortgage free!

Plan a sinking fund for your homeowner’s insurance and your property taxes in your monthly budget. You don’t want these big-ticket items to surprise you down the road.

Side Note: For budgeting, we love Mint, but Zeta is a great tool for couples.

This is also a time to make some big decisions about this newfound money.

What do you want to do with all of this extra cash each month?!

Since my wife and I were making extra principal payments, we had an extra $2,300 to spend in our first month of mortgage freedom. It was a bit overwhelming for us!

We decided to allocate our extra money in the following ways:

Credit Card Rewards, Travel Hacking, Family Vacation
Here we are enjoying the sunshine in Cabo San Lucas

9. Receive an Official Letter from your (former) Mortgage Provider

Around 30 days after you make your final payment, you’ll receive an official letter from the mortgage company stating that your loan is paid in full. 

You’ll want to keep this one for your records. Or you could frame it like we did.

Frame or no frame, make sure you save it just in case. 

10. Obtain the Mortgage Release Documents

Your mortgage company will produce “mortgage release documents” that prove the mortgage is no more. Be sure to speak with your lender to understand when these documents will be sent to your County Clerk for processing.

You should also receive a copy of these documents that you’ll keep for your records. Depending on your specific situation, you may need to go to the County Clerk to get a copy yourself.

After all of these steps, make sure you celebrate this HUGE moment with your loved ones. Some people live with mortgages for their entire lives … not you. You’re mortgage free!

Here’s how our crazy family celebrated:

Have you recently paid off your mortgage?

Please tell me about it in the comments below!

Happy woman feeling free and happy

Author: Andy Hill

Andy Hill is the host of the Marriage, Kids and Money Podcast which focuses on helping young families build wealth. This 5-star rated podcast was nominated as "Best New Personal Finance Podcast" by Plutus. Andy's advice and personal finance experience have been featured in major media outlets like Business Insider, MarketWatch and NBC News.

32 thoughts on “Ready to Pay Off Your Mortgage? Remember These 10 Important Steps”

  1. Love it! Congratulations! I don’t escrow funds with my mortgage, but good advice regarding starting a sinking fund for your taxes and insurance. That’s what I do. Otherwise, the costs can really creep up on you!

  2. Holy cow!!!! I had no idea it was that complex…. Thank you so much for writing this up. I will be using it as a reference in the very near future! 😀

      1. It’s not mandatory to make final payment using secure fund: bank check, wire transfer…. Just make payment using ACH.
        If could pay your principal balance with full projected (current statement) interest (Amount 1). If your mortgage processor sends paper to your local recording office (some does and some does not) then they will charge you this fee (no extra – $14). You can call/google recording office for this fee (Amount 2).
        Your final payment Amount 1 + Amount 2.
        $30 fee will be charge if you ask to for payoff statement.
        If you overpay then you will get your money back within 30 days after final processing.

        1. Great feedback Eugene! I’ve only paid off one mortgage and this was the process I went through.

          I’m glad to hear there are other ways of getting it done!

          1. Andy, I have a question. Does the mortgage payoff amount have to include the normal escrow payment as well? I don’t see why it should, since I plan to pay off the mortgage before the property tax and insurance are due.

          2. I believe in my situation I did not have to include escrow (taxes and insurance), but every mortgage company is different. I would recommend contacting your mortgage company directly and asking them. It’ll be a fun call to have!

            “So … I’m about to pay off my mortgage and … ”

            Good luck!

  3. Thanks – this information was really helpful especially the list of all of the entities we had to update. We just made our last payment and have started down the list of notifications. Thanks again!

  4. We are a payment or two away and we’d found out about the payoff request alreay, but your write up was very helpful! I assumed there would be a final fee gouge or two, but it was nice to see it wasn’t worse. Hopefully our gouges will be similarly modest. A belated congratulations and thanks a lot!

    1. Awesome Jeff! Way to go!

      I’m glad to hear you’re nearing the doors of mortgage freedom!

      If you want to share your win with my podcast audience ( when it’s all paid off, please contact me. It could inspire someone else to crush their mortgage too!

  5. Thanks Mr. Hill, the mortgage company was a little skeptical about me inquiring about my mortgage payoff statement in fact she suggest that I pay my February payment before I get a pay off statement which maybe less than my monthly payment Thanks for the information that I will be following in the coming months.


  6. Great information, we are 3.5 payments from wrapping up our mortgage. We had no idea that there was work to be done after the last payment. Our lender is requiring us to call them just before the last payment is made (May, 2019) as I now realize they will likely add fees as noted in the article. Thanks!

    1. 3.5 payments away from MORTGAGE FREEDOM! That’s awesome news, Mark.

      If you want to share your good news with the listeners of my podcast in May, please let me know.

  7. Suppose you get no cooperation from mortgage company. First they send payoff letter. Payoff submitted timely. Mortgage company then asked for more to cover escrow account used for property taxes I’m skeptical because Consumer Financial Protection Bureau has sued them and mortgage company changed their name. dan

    1. Sounds shady Dan. If you’re skeptical in sending them more money, ask for more details.

      If you’ll be managing the taxes and insurance payments going forward, then why do they need more from you?

      Good luck! And congrats!

  8. Thanks for this! We’re about to pay off our mortgage this month (!) and Freedom Mortgage also happens to be our mortgage servicer, so it was really helpful to see exactly what this process looks like. Thanks again!

  9. I am ready to pay off now. 8 years ahead of time and this was a GREAT info so I know what to expect. I have 3 taxes per year and insurance escrowed. Since I will be paying off BEFORE any of the taxes are due I am going to see if they will use the 700.00 some escrow towards the pay off. If not, I will ask when I will receive my escrow funds back. I am so glad I stumbled upon your post.
    Kathy in Michigan

  10. Thanks for this great information. I paid my house off in 3yrs on September 2019. I followed your steps right before doing so and they were dead on accurate.

  11. I am dealing with the Executor for the Estate of my mortgage holder. Loan was on an Installment Note due in 5 years with a balloon payment. They agreed to a big discount if paid asap. Since there are no banks involved, is the process still the same?
    Any information is appreciated.

    1. Very helpful, as I plan to pay my mortgage off this coming week. I did live on the water so I do intend to keep my insurance.
      Great idea for insurance payment.
      Thank you

  12. I’m doing mine a bit differently….As I knew I was in the last year of payments, I cancelled the escrow account with the bank and paid my taxes myself with the escrow refund. The home insurance portion of escrow was cancelled last year and is now on auto pay monthly with a credit card to earn points, avoid being late or not having the money set aside. When I do my annual shopping to compare home insurance costs, the process to switch my insurance company is MUCH easier now that the bank is out of the equation. I will probably pay my last payment in the branch (wearing dark glasses, long sleeves, and a duffel bag) while I slip the teller my cash in an envelope and wisper goodbye

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