What happens after you pay a mortgage in full

MAILBAG

July 10, 2005

We bought our home in 1997 and refinanced in 2001 with a 25-year mortgage at 6.25 percent. With the stock markets and mutual funds doing badly for us (we lost money and have not made it up), I decided to pay down the mortgage and paid it off this month.

What happens now? The mortgage company cashed my last check May 6 and I still haven't heard from them. Was my strategy to pay off the mortgage wise? What do I have to do regarding taxes etc. now that I own the house outright?

Now that you have paid your mortgage in full, the lender will send you a signed document that declares that the debt has been fully satisfied and that your property is released. The release or satisfaction needs to be recorded in the land records of the county Circuit Court where the home is located. Some lenders send the release document to the land record office together with the recording fee. Other lenders send you the release with a letter advising you to record it. It is important that the release document be recorded as legal proof that there is no longer a lien on your home.

It is now your responsibility to pay real estate taxes and to keep the property insured. The tax and insurance bills should be sent directly to you. Maryland real estate tax bills are sent in early July each year. Taxes are billed in advance. You have the option to pay for six months at a time or for the year. You should check with your insurance agent to learn about payment options for your homeowners insurance.

The 6.25 percent interest rate on your mortgage loan was higher than current mortgage rates. So you probably were wise to pay it off. If you need funds, you can remortgage your property based on current rates.

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