Q: I am in the eleventh year of a 30-year mortgage in which I have always made extra payments.
My remaining balance is around $8,000. I plan to sell this house next year and buy another.
I’m on schedule to payoff my mortgage in the next couple of months and I am not sure exactly how to do it.
My mortgage is held by a private individual. When I bought the house, the seller offered to take back the mortgage. At the time of the closing I was given an amortized schedule which I use for my monthly payments.
Do I need to hire an attorney? How do I remove the lien from my property? What do I need my mortgage holder to do?
A: First, congratulations on doing such a great job of paying off the loan so quickly.
The good news is you probably don’t need an attorney to pay off your loan. When you are certain that you have paid off the loan, you need to contact your lender (the seller) and confirm that the loan is now paid off. Your lender will need to return to you the original note and mortgage you signed eleven years ago, along with a release of the lien of the mortgage.
The release of the mortgage should be a one- or two-page document that states that the lender releases his or her interest in the original mortgage. It should contain the information from the original mortgage including the document number given to the mortgage by the recorder in the county in which your home is located.
In addition to this information, the release of mortgage document should contain the address for your home, your property tax parcel or property identification number along with the legal description for the home.
There are companies that have forms individualized for each state to assist your lender in preparing a release of a mortgage. Once the document has been signed by your lender, you should have that document recorded in the county in which your home is located. That puts the world on notice that your loan is paid off.
If you have additional questions, you can seek the assistance from a real estate attorney in your area, the recorder of deeds in your county or even some title insurance companies. Each of these might be willing to help make sure the document has all the necessary information and will release the lien of your mortgage.
Finally, it never hurts to receive a letter from your lender along with the other documents that states that your loan is now paid in full.