So, you’re about to clear your mortgage? That’s fantastic! But there’s a bit more to it than just making that final payment. When I paid off my first property’s mortgage in 2015, I learned a lot about the process and the unexpected fees that come with it.
Let me tell you about my journey. I bought my first property, a two-bedroom condo in San Francisco, back in 2003. It cost me $580,000, which I thought was a pretty good deal at the time. Over the years, I’ve been consistently paying down the principal and refinancing whenever the rates dropped. Finally, in 2015, I was able to fully pay off the mortgage. It felt amazing, and I don’t regret it one bit, even though the markets have surged since then.
But paying off a mortgage isn’t as simple as it sounds. There were a few surprises along the way. Here’s what I had to do:
- I had to call the mortgage department and request a principal payoff letter. This letter calculates exactly how much you owe in principal and interest. If you overpay, they’ll refund you later.
- After getting the letter, I wrote a check for the exact amount and sent it in. I also had to cancel any automatic payments.
- I had to wait for the paper Deed in the mail. If it didn’t arrive within a month, I would have had to call to find out what was happening.
- I had to confirm that the liens were removed with the title company and the bank. This involved requesting a "Reconveyance Letter" from the mortgage holder. This letter confirms that there are no liens and that the title has been transferred back to you.
- Finally, I had to notify my insurance company and local county tax office to change the bills directly to me.
There were also some unexpected fees. For example, even though my principal balance was $20,742.07, Citibank charged me interest through 5/16/15. There were also recording fees, reconveyance fees, and a payoff statement fee.
After all this, I finally received notification that my mortgage was fully paid off. I even got a little money back from the extra interest I paid.
Paying off your mortgage might seem like a daunting task, but trust me, it’s worth it. Yes, you could potentially make more money by investing, but the feeling of being debt-free is priceless. I paid off another mortgage in 2022, and it felt just as good.
So, if you’re about to pay off your mortgage, be prepared for some extra steps and fees. But don’t let that discourage you. The peace of mind you’ll get from being debt-free is worth every penny.
