Before the Great Depression, homeowners had to renegotiate their mortgages every year. During this time, one in 10 homes faced foreclosure for nonpayment.
When the economy crashed in 1929, the U.S. government stepped in to introduce changes that led to the GI Bill (helping returning soldiers buy homes) and the 30-year fixed-rate mortgage, the most popular mortgage product today.
Having a 30-year fixed rate mortgage is a great option for buying a home. It lets you put a certain amount of money down and pay the rest over time, generally 30 years but some buyers opt for a shorter term.
So, when you’re nearing your final payment, after all those years, you’re probably feeling a lot of excitement. You’re just about to the finish line!
Your Next Steps
When your 30 years of mortgage payments are coming to an end, you’ll want to get in touch with your mortgage servicer (the company that collects your mortgage payments) for a payoff quote.
That quote will tell you how much principal and interest you need to pay and the date(s) that money is due. It’s important to get a payoff quote because your final payment may include fees to release the paperwork that needs to be completed with the county recorder.
Your payoff statement will also tell you how to make your final payment. Some lenders request that you send the final payment via wire transfer, while others will accept a bank check (cashier’s check) or certified check. Your lender may also accept a personal check or ACH transfer.
What You Can Expect
When the final payment is made, you may receive:
- A loan payoff letter from your servicer acknowledging your final payment.
- A canceled promissory note (your agreement with the lender to pay back the debt). A deed of trust or mortgage deed (some lenders may send this only to the recorder’s office).
- A certificate of satisfaction from your local office of records (the county recorder, county clerk or another department depending on where you live). You should keep this document in a safe place.
Some lenders may not provide all of this paperwork and that’s fine, as long as you have proof you’ve fully paid your mortgage and you’re “free and clear.”
Ideas for Celebrating the End of Your Mortgage
You can celebrate the freedom of being free of your mortgage payment in a variety of ways, depending on where you live and your own family traditions. Here are some ideas:
- Let an eagle fly — If you live on the East Coast or in the Midwest, you may be familiar with the tradition of attaching an eagle over your garage door when your mortgage is paid off. Living mortgage-free after decades is certainly something to crow about!
- Paint your door red — It’s a Scottish tradition to paint the front door of your house red when you’ve paid it off (who knew?). If you like the idea, and the color works on your house, you might want to make a party of it and invite neighbors and friends to help with the painting to celebrate.
- Build a mortgage wall or piñata — Building a paper “wall” to run through with your mortgage papers or shredding them (be sure to keep copies of these important documents) to fill a piñata will let the whole family participate in ushering in your mortgage-free era with a rip or bang!
- Share the last payment as a family — Before you write that final check, consider involving your family members in making the final payment. For instance, if you have young children, pay all but $10 of the mortgage and let them walk into the lender or mail the “final bit” to pay off your home. If you bank in person, this will let the bank officers and staff join in the fun in thanking the kids and conveying the value of buying a home with a mortgage.
- Keep paying (yourself) — You’ve become accustomed to setting aside your mortgage payment each month, so why not divert those funds to another use. Need to pay off other debt? Want to plan a once-in-a-lifetime family getaway? The sky’s the limit when it comes to how you use your “extra” money. Enjoy!
Paying off your mortgage is a milestone that moves you into a new phase financially so you can build wealth. Make sure you make the most of this time, and the money you’re now saving.
Have celebratory ideas of your own to share? Photos of your ‘mortgage-free’ home? Send them to us at firstname.lastname@example.org.
We’re Here to Help
Whether you’re just thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.