Estimated reading time: 3 minutes
Introduction
So, you have one of the 3 ways to pay off a mortgage. No matter which one you are doing, it’s an exciting time in your homeownership journey!
What are the 3 ways?
There are indeed 3 ways to pay off your mortgage.
- Paying your mortgage off at the end of its term.
- Refinancing your current loan.
- Selling your home.
Next, we’ll talk about each type of payoff and give you insight into what happens in each situation.
First Way To Pay Off Your Mortgage: End of Term Payoff
Let’s look at the the first of the 3 ways to pay off your mortgage. End of term means that you paid off your mortgage after the actual term of the loan. For example, you paid off your 30-year mortgage after that amount of time.
Your lender is responsible for closing your account after receiving your payoff. They are also responsible for filing the appropriate release or satisfaction piece (if you’re in Pennsylvania) in the correct local county Recorder of Deeds office. When conducting a title search, the paid-off status of your mortgage will be shown.
Second Way To Pay Off Your Mortgage: Refinance
Another way to pay off your current mortgage is to refinance it. For example, you decided to refinance your mortgage because you can get a lower interest rate. To do so, you will need to pay off your old mortgage first.
Again, your previous lender will close the account on your old mortgage and file a release/satisfaction piece in the county Recorder of Deeds office where your property is located.
Third Way To Pay Off Your Mortgage: Home Sale
We’ve come to the last of the 3 ways to pay off your mortgage. And that is to sell your home. If you are selling your home and your mortgage isn’t paid off, you will need to pay off the remaining balance. Generally, you use the money received from the sale of your home to pay off the old mortgage.
And, yes, you guessed it! Your old lender will close your account and ensure that the correct documentation reaches your county’s Record of Deeds office to demonstrate satisfaction of the loan on your old property.
How Can A Title Company Help?
A title company can help you with all 3 ways you can pay off a mortgage, either by answering questions, helping with paperwork, or by handling your sale or refinance.
What We Can Do
A title company plays a vital role in either the sale or refinance of your home. We can:
- Do a new title search on your new home or for your refinance.
- Request payoff information.
- Get the information needed from your lender for the payoff.
Keep in mind, both refinance and sale transactions need title insurance! When a new loan is taken out, especially for a refinance, the lender will need a new Loan policy. (Your Owner’s policy is still good.)
Conclusion
Now you know the 3 ways you can pay off your mortgage. We hope you learned something new. Remember: Landmark Abstract can provide you help with all the ways a mortgage payoff can happen.
Contact us today for more information!