Very little can bring about the type of satisfaction that comes with making your last mortgage payment. Unfortunately, bank recordkeeping is anything but perfect. Horror stories abound regarding unlucky homeowners who paid off their mortgages but whose lenders never recorded the payoff. Mistakes like this can result in a legal and financial nightmare. It's crucial that you obtain proof of your mortgage loan's status to avoid costly lender errors.
Final Balance Statement
Although processing your final payment and releasing your mortgage lien takes time, you can get short-term proof that you paid your mortgage in full by requesting that your lender send you a mortgage balance statement. Mortgage balance statements contain information such as how much you owe in principal and interest, the amount you've paid toward the loan and a tentative payoff date. After the lender processes your final payment, request a final statement. This statement should show that the mortgage was paid off and the date the bank processed your final payment.
Canceled Promissory Note
When you originally applied for your mortgage, you signed a promissory note agreeing to make payments on the loan and its interest charges. Once you satisfy your end of the bargain and pay off your home loan, your lender cancels the promissory note -- demonstrating that it no longer holds a valid claim on your property. The lender will then mail you the canceled loan contract. The canceled loan documents serve as proof to any third party that you no longer owe any debt to your mortgage lender.
Lien Release Documents
After approving your mortgage loan, the lender files a lien with the county where the property is located. This lien provides the lender with a vested interest in your home, giving it the ability to foreclose if you fall into default. After you pay off the loan, the lender no longer needs the lien and must release it.
A lien release can occur in one of two ways: either the lender contacts the land records office and arranges for the lien to be released or the lender provides you with the necessary paperwork to have the lien released on your own. After your county records office releases the lien, you can request documentation that the lien is no longer in effect. Because your mortgage lender will not release your lien until you pay off your mortgage, a lien release form serves as proof that you paid off your mortgage.
When you finance a home purchase, the mortgage company either holds onto your property deed or -- and this is the more common scenario for mortgage lenders who don't service their own mortgages -- sends it to a third-party trustee. If a trustee holds your deed, it is known as a “deed of trust.” Mortgage companies will generally release their hold on your deed and return it to you after you pay off your loan. Your mortgage deed demonstrates that you are the sole property owner and the bank no longer has a valid claim against your property.
- The New York Post: In a Sign of Foreclosure Flaws, Suits Claim Break-Ins By Banks
- First Foundation: What Is a Mortgage Statement?
- The Washington Post: Paid off your mortgage? Congratulations, but there are still some things you need to do
- Poughkeepsie Journal: Kass Mailbag – Be Sure to Get Written Proof of Paid-Off Mortgage
- NOLO: Collect Your Court Judgment With a Real Estate Lien
- U.S. Mortgage Insurers. "Low Down Payment Facts." Accessed Sept. 3, 2020.
- Consumer Financial Protection Bureau. "What Is a Second Mortgage Loan or "Junior-Lien"?" Accessed Sept. 3, 2020.
- IRS. "Publication 936 (2019), Home Mortgage Interest Deduction." Accessed Sept. 3, 2020.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.