For many homeowners, paying off a mortgage occurs only once in their lifetime. Taking on a large debt, especially one that lasts for thirty years, is a substantial commitment that deserves to be celebrated once it’s over. However, once the celebration is done, it’s important that homeowners take the time to make certain that they have received all the necessary paperwork and that they have prepared themselves for the new financial obligations that they now have.
These obligations include paying their homeowner’s insurance premiums and their property taxes if those two fees were included in their mortgage’s escrow. If they were, the homeowner is now responsible for paying both directly. Property taxes are due once a year, while insurance premiums can be due every six months or once a year, depending on the insurance company. Some homeowners don’t realize that without a monthly mortgage payment, they are no longer paying one-twelfth of these two bills every month.
Fortunately, mortgage companies often estimate a mortgage escrow account to be more than what is actually needed, which means homeowners who have paid off their mortgage will often receive a refund from the lender. This money can be set aside to help pay on the insurance or property taxes.
Homeowners should also receive a released deed from the lender that declares the mortgage paid off and the original mortgage paperwork that should now be marked as canceled. These two documents prove that the homeowner now owns the property free and clear of debt.