Mature couple enjoying homeownership after paying off their mortgage

After Paying Off Your Mortgage, What Happens Next?

Post Author:



Date Posted:

August 20, 2020

Share This:

No longer having a mortgage is hugely liberating. Many people work for their entire lives thinking about the moment they truly own their entire home. But if you’ve always been focused on becoming mortgage-free, what comes afterward can feel like uncharted territory.

In fact, there are a few final steps you need to take before you can pop that bottle of celebratory champagne. Namely, there are several administrative tasks that you’ll need to address, ranging from obtaining certain documents, figuring out what to do with the extra money you’re not using for mortgage payments, and more.

The exact post-mortgage process will vary depending on your lender, your loan type, what state you live in, and other factors. But there are still a few general steps you’ll need to take. Read on for everything you need to know about what happens after you pay off your mortgage. 


There’s a lot of paperwork involved with paying off a mortgage. It’s important to hold onto these documents and keep them organized in a safe place.

When you finalize paying off your mortgage, you should get a statement indicating you have paid your loan balance in full. Other paperwork you should receive includes: 

A Canceled Promissory Note

When you first took on your mortgage, you signed a promissory note. It indicates that you agree to the terms of the loan (monthly payments, interest amounts, etc.).  

A canceled promissory is a copy of the original with something along the lines of “Paid and Canceled” on it. This shows that your lender acknowledges that you have satisfied your debt.

A Certificate of Satisfaction

Your lender will also send out a certificate of satisfaction. Some lenders will send it to your local government. If this is the case, your local government will update its records without you having to do anything. You’ll receive your deed and officially be the sole owner of your home. 

Note that some lenders may send the certificate of satisfaction directly to you. If this happens, you’ll need to file it with your local government yourself.

Timeline for Receiving/Filing Documents

The process of receiving and filing documents can take a while. If you haven’t received any documents within a few weeks, contact your lender and ask for them to be released.

After a month or so, check with your local records office to verify that they filed the certificate of satisfaction. This will ensure that your mortgage is canceled and that your lender no longer has a lien on your property. 

Check Your Escrow Account

When you take on a mortgage, your lender opens up an escrow account for you. They deposit a portion of your mortgage payments into this account. Then, they use this money to pay your insurance premiums and property taxes on your behalf. 

When you pay off your mortgage, there may be money left over in your escrow account. Contact your lender to see if there’s a remaining balance. If there is, they will send you a refund check!  

Take on New Financial Responsibilities

Being mortgage-free means you have access to your escrow account’s remaining balance. It also means that your lender will no longer take care of your insurance premiums and property taxes. 

As the sole owner of your home, these responsibilities fall on you. You should set aside enough money each month to cover these expenses.  

Homeowners Insurance

Lenders require you to have homeowners insurance. Once you are your home’s sole owner, you don’t necessarily need your policy anymore.

However, maintaining a policy will help you protect your assets. After paying off your mortgage, make sure you update your policy with your current information. This will allow you to successfully file a claim should you ever need to.  

Property Taxes

Homeowners insurance isn’t mandatory, but property taxes definitely are. Now that your lender is no longer paying them, you’ll have to pay them yourself. 

Contact your state, county, and local authorities and have them send your tax invoice directly to you. Depending on where you live, you will have to make payments either annually or quarterly. 

Figure Out What to Do with the Extra Money

In the U.S. an average monthly payment for a 30-year fixed mortgage is $1,275. This is a lot of money that you’ll no longer be putting towards mortgage payments. But what should you do with it?

Here are just a few smart moves you can make with this extra cash:

• Pay off other debts. You might be mortgage-free, but you probably have other debts you still need to pay off. Work towards being 100% debt-free by paying off your car payment, credit card bills, student loans, etc. 

• Build your emergency fund. Everyone should have an emergency fund equivalent to at least 6 months of their living expenses. If your emergency fund is lacking (or even nonexistent), now’s the time to build it. This will give you financial security when unexpected expenses come your way. 

• Put it towards your savings goals. We all have savings goals. Maybe you’re hoping to go on a dream vacation or save up for your kid’s college tuition. Whatever the case may be, the extra money will help make these goals a reality. Make a savings plan with this extra money.

• Renovate your home. Now that you fully own your home, you may feel the itch to start making updates and repairs that you’ve always wanted. And remember that renovations aren’t just for you—they can also increase the overall value of your home when it comes time to sell.

• Invest. Make your money work for you by investing it. You can catch up on your retirement savings or try your hand at shorter-term investment options.

Don’t Get Caught Up in the Excitement

Being mortgage-free is exciting. But it’s important to not neglect your new responsibilities as a homeowner. 

Mortgage-free homeowners tend to make some common mistakes, including:

• Neglecting to get the proper paperwork

• Leaving the remaining balance in your escrow account unclaimed

• Neglecting to pay your property taxes

• Not updating your homeowners insurance

• Being frivolous with your new-found extra cash

If you are looking to renovate after paying off your mortgage, contact us today to learn about your loan options. We can help you get those new countertops or flooring, refinish your basement, redo your bathroom, and more.

Recent Posts

  • fix and flip loans

All About Fix and Flip Loans

Rehabbing homes remains a great source of income because acquiring property has long been a sound investment. However, you’ll require fix-and-flip loans to meet your needs, whether you’re a first-time flipper or a seasoned investor. Read More