It is important to keep accurate records on a paid-off loan, especially when it comes to the mortgage itself. When you get a home loan, the original mortgage is sent to the county by the lender. The county clerk records the document and sends it back to the lender who maintains the original in the file for the life of the loan. It keeps the original so it can exercise its foreclosure rights in the event you don’t pay the loan as agreed. You do not get the original back until you pay the loan in full.
Request a payoff figure from your lender as of the date you intend to pay the loan. The payoff figure will include principal, interest and the fee to cancel the mortgage of record with the county clerk.
Make the final payment to the bank. Make sure to pay the exact amount as shown on the letter to avoid any delay in the cancellation of the mortgage. Once the check clears and the lender processes the payoff, it will endorse the mortgage for cancellation and forward it to the clerk.
Follow up with your mortgage company if you have not received your original mortgage within 30 to 60 days. The amount of time it takes to cancel a mortgage will vary based on the volume of payoffs being processed by the lender as well as the processing time and volume at the clerk’s office.
Acknowledge receipt of the original mortgage once you’ve received it in the mail. After the clerk cancels the document, it will return the original to the lender who, in turn, will forward it to you. Once you receive the original, store it in a safe, easily retrievable, place.
- If you don’t want to pay the mortgage cancellation fee, ask the lender to endorse the original for cancellation and make arrangements to pick it up directly. You can hand-deliver the document to the county clerk for cancellation, bypassing the lender’s fee and transit time. Note that you will still have to pay the county clerk’s cancellation fee, but this typically less than the lender’s.
- Make sure the original cancelled mortgage is in your hand before seeking other financing. An open mortgage, even on a paid-off loan, can delay a new closing, costing you time and money in the process.
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.