How to Stop a Mortgage Before Closing

Because of the number of moving parts involved, it's not unusual for a mortgage transaction to be postponed or even canceled before closing. The act of canceling a mortgage isn't difficult in itself. The tricky part is determining the ramifications of doing so. Depending on the type of transaction, you stand to lose money or even a property. Make sure you understand the consequences before following through with the cancellation.

Contact your mortgage representative to tell him verbally that you want to cancel the loan. Ask if any upfront fees such as the application fee are refundable.

Contact your real estate agent and attorney in the event of a purchase. Tell them you are not proceeding. Let them know your intent for the transaction. For example, you may still want to proceed with another lender or stop the process completely.

Write a letter addressed to the mortgage company, stating that you want to formally withdraw your loan. Most banks require this type of documentation. Include your name, application number, the property address and the mortgage amount.

Sign the letter and make a copy for your records in case the bank misplaces or doesn't receive it.

Send the letter to the bank, using a traceable method such as email, fax or certified mail. Alternately, you can take it to the bank yourself. Give it to your mortgage rep directly, not a receptionist. When the bank receives written confirmation, it will stop the mortgage.


About the Author

Carl Carabelli has been writing in various capacities for more than 15 years. He has utilized his creative writing skills to enhance his other ventures such as financial analysis, copywriting and contributing various articles and opinion pieces. Carabelli earned a bachelor's degree in communications from Seton Hall and has worked in banking, notably commercial lending, since 2001.