You’ve paid off your mortgage, which means you now have a lot of new little problems and concerns to fill your time.
Sure, these are good little problems and concerns. What do I do with my extra money every month? Where do I put my deed? Nobody’s going to feel sorry for you for having these “problems,” and everyone will mock you with air quotes if you refer to them as such, but they still need to be solved.
In other words, paying off your mortgage is a major milestone, but yes, you still need to be vigilant and take care of these next steps.
[See: 10 Ways to Reduce Your Housing Costs in Retirement.]
You made the last payment — now wait. It may take a few weeks to receive your paperwork, which will include a “satisfaction of mortgage” statement — a letter stating that you’ve paid off your home. You may also even receive a check, since your mortgage lender probably had some of your money in reserve to pay your homeowners insurance and property taxes. If you don’t receive anything by the date of what would have been another payment, that would be a good time to call your lender to check on your paperwork, just to make sure your paperwork will soon be on its way.
Getting the actual deed to your home may take a few more weeks at least — the county needs to record that you’ve been released from your obligations to your lender. And when you do get the deed …
Put your deed somewhere safe. Like, in an actual safe, preferably one that is fire and waterproof. Or even better, place the deed to your home in a safety deposit box.
“For customers of most banks, safety deposit boxes can range from $30 to $100 per year depending on the size,” says David Reiling, CEO of Sunrise Banks, headquartered in St. Paul, Minnesota.
But what happens if you don’t put your deed in your house and then you lose it? Are you at risk that you could lose your house?
Not likely. It’s more of a hassle to replace than anything else.
“Losing a deed today isn’t as serious as it used to be. But if you do, the county that your house is in has records and for a small fee will issue you a new deed,” Reiling says. “That being said, they also recommend pursuing owner’s insurance through the title company you worked with to keep yourself protected if an ownership dispute arises.”
And it is possible that someone questions your ownership if things go badly down the road. For instance, stories will occasionally pop up in the media of homeowners with dementia being scammed out of their home. Let’s put it this way: You don’t want to leave your deed lying out on the coffee table for anyone to grab.
[See: 10 Terms First-Time Homebuyers Must Know.]
You still have to pay property taxes. And homeowners insurance. That’s easy to forget about, at least at first. If you’re like most people, your taxes and insurance were part of the monthly mortgage payment. They were held in escrow by the loan servicer, which would make the payments for you.
But now, you’re taking over those payments. If you’re unsure if your county treasurer’s office knows to send you the property taxes bill, you’ll want to contact them. And you’ll want to start putting money away to pay both your taxes and insurance.
“I recommend homeowners create their own escrow accounts by setting aside funds for their insurance and property taxes into a bank or savings account each month. They can use the previous year’s amount as a guide for the amount they need to set aside. That way they will be prepared when the bills come due and not have to blow a hole in their budget to make ends meet,” says ReKeithen Miller, a certified financial planner, enrolled agent and portfolio manager with Palisades Hudson Financial Group in Atlanta.
As for your homeowners insurance, you should call your agent and make sure the bill will be sent to you and not the lender.
[See: 8 Potential Headaches to Be Aware of Before Becoming a Homeowner.]
Spend that monthly mortgage payment wisely. But, of course. Everyone knows that. Still, if you’re wondering exactly where that money should go, consider putting some of it back into your house, suggests Nancy Butler, a Waterford, Connecticut-based business coach and motivational speaker, who specializes in working with businesses, particularly in the real estate industry.
“Odds are, if your mortgage is paid off, your house is older,” she says. Butler suggests putting some of that monthly mortgage aside “for major repairs that may be needed in the future, such as a new roof, heating system or water heater.”
Still, if you feel good about your ability to pay off home improvements or are simply looking for more ideas on what to do with your money, Timothy Gagnon, an associate professor of accounting at D’Amore-McKim School of Business at Northeastern University in Boston, suggests putting the extra money every month into an emergency fund or growing your retirement.
“If you aren’t matching out your 401(k), now’s your chance,” he says.
Another way to look at it. You’ve spent decades watching the numbers on your mortgage slowly go down. Now it’s time to start watching the numbers in your retirement fund and your savings account quickly go up.
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You Finally Paid Off Your Mortgage. What Now? originally appeared on usnews.com
