Paid off House Now What? – Here’s What to Do Next!
There is no doubt about it, purchasing a home is one of the biggest investments that someone would make in their lives. Obtaining a mortgage and making your payments take so much sacrifice that we often overlook life after mortgage is paid off.
We forget to think and plan for what comes after all the years of financial focus and commitment. My house is paid off now what?
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So much of your life has been dedicated towards this payment that it’s almost ironic that the freedom from having no mortgage can feel so awkward.
If you are almost there or one of the lucky ones that are now living mortgage free and wondering what to do after mortgage paid off, I’m here to guide you along!
What To Do After Mortgage is Paid Off?
Ensure that the lender presents the release of mortgage or release deed and it is filed at the local registration office. Enjoy the mental freedom, while using the additional available income to treat yourself to some added luxuries. Plan for the future and retirement with good investments to build your net worth.
The most important thing to do in life after mortgage is paid off is to enjoy the peace of mind that comes with it! Enjoy the fact that a once significant financial burden is no longer there.
The American dream revolves around the concept of freedom, prosperity and social upliftment. Being mortgage free and actually fully owning your home, without any obligations to the bank, is probably the epitome of the American dream.
Like a prisoner released back into society after serving a 25 – 30 year sentence, what exactly do you do after walking away a free man? The sudden burst of fresh air, mental and financial relief can be overwhelming.
My house is paid off now what? Laugh? Cry? Dance?
What to do once house is paid off?
1. Enjoy the Moment!
You’ve worked hard and invested your blood, sweat and tears into becoming a home owner. Enjoy the fact that your house is paid off and you owe the bank nothing!
It may take a while to sink in. After all, a significant chunk of your paycheck would have gone behind this payment for a large portion of your life. It’s now time to celebrate!
Have a party or get together with friends! Have a toast and enjoy this milestone in your life!
2. Cancel all Automatic Payments (Standing Orders)
Ensure that you cancel all your automatic payments or installments to the lender with regards to the mortgage payment. Requesting a refund and going through the process can get very annoying so be sure not to overpay unnecessarily.
3. Ensure Paperwork is Completed!
Depending on where you live and the practices of the particular financial institution that facilitated your mortgage, you can expect certain documents.
Your loan servicer may choose to outfit you with certain documents upon paying off for your mortgage but the most important thing is that you receive some sort of solid evidence that attests to the fact that you are no longer indebted to them.
Regardless of their “standard practices” in terms of distributing paperwork, you need to seek your own interest and ensure that you have this proof!
Here are some of the paperwork that you need to ensure are completed so that you make the most of life after mortgage is paid off:
• Canceled Promissory Note – A promissory note, in the case of a mortgage is a note stating that you intend to pay it. A canceled promissory note is good to have, but is optional as long as you have other evidence that your loan has been cleared.
• Final Mortgage Statement – This is basically the final statement showing that your mortgage is now fully paid and you don’t owe the lender anything. All fees, interest and principal payments have been covered. You should definitely file this document safely, for your records.
• Release of Mortgage or Deed of Trust – Both a mortgage and deed of trust are legal documents that authorize a lender to foreclose and sell your property in the event you are unable to pay. You would get either a mortgage or deed of trust depending on where you live and the arrangements you make.
What to do after mortgage is paid off? Ensure that that your loan servicer sends you or your local registrar (recorder of deeds / administrative office for real estate document filing) a release of mortgage.
Depending on the particular loan servicer, they may send you or relay it directly to the local office. Either way, ensure that this is done! This document is filed and legally confirms that you are no longer in debt and the lender has no rights to your property anymore.
Similarly, for a deed of trust, the lender presents a release deed upon completion of your payments. A deed of trust is a document that gives temporary control of the title to your property, to the lender.
Upon completing your payments, this control needs to be relinquished, by filing a release deed at your local registrar or real estate management office.
• Loan Payoff Letter – This is not mandatory but is just added evidence of completion of your payments, for your record. This may be something that is issued as standard practice by the loan provider, or you may need to request it.
It’s basically an official letter from the lender that states that you have paid off your mortgage.
• Certificate of Satisfaction – Once the financial institution that provided the loan has provided the official documentation that your mortgage has been paid off, your local registrar or office of records will issue a certificate of satisfaction.
Depending on where you live, there may be a small fee of $25 to $50 attached to it. However, this is a very important document that you would want to have.
Paid off House Now What Additional Paper Trails are There?
• Escrow Refund – In the event that you had a mortgage escrow account, upon paying off your mortgage, you would need to get a refund. Contact your loan provider if you haven’t received this payment after 20 days.
• Property Tax Statements – More than likely, if you had an escrow account, your property tax statements would have been going to your loan provider. These would now need to come directly to you. Contact your local tax office to make arrangements.
• Property Insurance – Similarly to the property tax, you would need to contact your insurance agency and inform them that they need to remove the loan provider from the policy. You would need to handle the payments directly from now on.
This needs to be done for all forms of insurance associated with your home, in the event they are spread across different agencies: general home insurance, natural disasters, flood, theft, fire, etc.
Ensure that all documents associated with you paying off for your mortgage, your purchase documents and your title insurance are all secured and stored away safely.
4. Pay off Other Debts
Your mortgage was the big ticket item on your monthly expenses and now this is out of the way. Are there any other loans or forms of debt that you have? Use the extra income to get rid of them.
Maybe you bought some furniture on hire purchase. You probably also have a small loan that you’ve been paying or even a car payment.
You can consider your options with regards to redirecting some of the now available funds, towards paying off some of your other debt faster than initially planned.
You can consider refinancing loans to pay a bigger amount on the existing loans or save up separately and pay off the loans in one large settlement. Review your options with your bank or financial advisor and pick what’s best for you.
5. Save Money for Emergencies
What to do once house is paid off? Start building an emergency fund and if you did have one before, build a better one now!
You never know when the unexpected would hit. It doesn’t need to be an injury or illness but you car may break down or something unexpected happen to your home. As adults, you need to prepare for the worst!
Having a decent amount of savings stashed away will do wonders for your peace of mind and offer you a cushion in the event you actually need to use it.
Approach your savings in a disciplined manner. Since you have gone so many years religiously making your mortgage payment, you can probably set up an automatic transfer to a savings account just as if you were paying another monthly bill.
It does not need to be the full amount of your former mortgage, but as long as you approach your savings like another bill payment, you would quickly grow accustom to it.
Ideally, if you can build your savings to 6 month’s to 1 year’s worth of your living expenses, you should be in good shape. It never hurts to have more though!
6. Invest in Your Retirement
A great point to focus on in terms of life after mortgage is paid off, is retirement and investing wisely to facilitate a comfortable retirement.
Two of the most common terms that come to mind when we think about retirement are IRA and 401(k).
IRAs or Individual Retirement Accounts
These offer a plan for individuals and their spouses to save for retirement, on a tax-free or tax-deferred basis until you withdraw at retirement. Your money grows and compounds at a higher rate over time.
The downside to IRAs is that there is a $6,000 annual contribution limit, but it rises over time. Persons over 50 years old can contribute an extra $1,000 annually.
A 401(k) is facilitated by an employer and allows for workers to save for retirement in a tax-free or tax-deferred basis until it is taken out at retirement. Employers also offer the option to match 401(k) contributions.
If your employer offers a 401(k) plan, you can discuss options with them to contribute additional income, now that your house is paid off.
Currently, the contribution limit is $20,500 and persons over the age of 50 can contribute an additional $6,500 annually.
Ensure that you review your options and your available additional funds so that you can maximize your retirement contributions.
7. Grow Your Net Worth with Additional Investments
Another answer for “what to do after mortgage paid off” is to invest the additional income to build wealth. The most solid strategy with regards to investing your way to riches is to set up a diversified investment portfolio.
Consider investing some money in a diversified stock portfolio, real estate, art and even cryptocurrency if you are in the mood for experimenting.
You can check out the article on how to become rich overnight for some solid investment advice, to be on your way to riches!
If investments at that magnitude are intimidating to you, remember you can always use the added income to invest into a brick and mortar type business to grow your income even further.
8. Help Your Kids and Others
What to do once house is paid off, that can be better than sharing with others? The additional wiggle room in your budget can put you in a great position to help your kids.
Support them so that they can reach the same level of financial freedom that you are now enjoying. Set up a college fund for your grandkids. They’d love you for it!
Additionally, you can be a blessing to others by contributing to charities or helping around the community. A little goes a long way to someone in need.
A life after mortgage is paid off, centered around giving and blessing others is as satisfying and rewarding as life can get!
9. Enjoy Life
You have now successfully closed off what probably was the most expensive investment of your life. What to do once house is paid off? Whatever you want!
Take that trip you always wanted to take but didn’t due to financial obligations. It’s time to live your dream now! Enjoy your hard work. Spend some extra on yourself.
Buy the car! Take the vacation! Go on the cruise! By yourself some toys!
Treat yourself! You deserve it!
Bonus Idea for What to Do Once House is Paid Off – Home Renovations
One of the big questions you can ask yourself after you’ve paid off for your mortgage is whether you plan on living in that house for the rest of your life or if you plan on selling and moving on.
Is an upgrade in the cards? Will you be downsizing if you are an empty nester?
Even if you’ve settled on your forever home and plan to live out your golden years, you may want to consider using some of your available cash to make it a bit more comfortable.
If it’s a two story, for example, you can probably consider a main level master suite. If you’ve always wanted a man cave or a she shed, now is your time. Get your basement or attic completed. Upgrade your kitchen or bathroom. Why not?
You’d make your home more comfortable and increase its value. Win-win!
Changes in Life After Mortgage is Paid Off
Paid Off House Now What Benefits Are There?
Mental Freedom and Security – Life after mortgage is paid off is simpler. That’s the best way to put it. You no longer have this substantial debt hovering over your head. You own your home and no one else has any rights to your property.
Financial Freedom – Financial freedom is when you have sufficient sources of funds available to satisfy your cost and standard of living comfortably. With your mortgage out of the way, you are well on your way to achieving financial freedom.
Career Freedom – How many persons are wrapped up in the concept of a “permanent job” or a “safe job” just because it’s comforting, even though it doesn’t pay the best?
This is because your financial obligations narrow your options. You would rather the safe, low paying job than the riskier one that pays more! Having a paid off mortgage gives you career freedom and additional job options as you can take a bit more financial risks now.
Investment Options – The added wiggle room in your budget now affords you the option to make investments to grow wealth and net worth. Use your money to make more money. Invest in stock, real estate, a business or even your kids or grandkids.
Avenues for Helping Others – Use your extra money to donate to charities or to help others. There are many less fortunate persons in society that can be blessed by your generosity.
Options for Fun and Enjoyment – Basically, you now have more money at your disposal. Your house is now secured and it’s time you have some fun. Take vacations, do fun activities and just enjoy life!
Options for New Goals – You’ve now conquered quite possibly the biggest goal and financial hurdle in your life. You have a bit of money available for a new challenge.
Think of something that you’ve always wanted to do or try but didn’t because of the financial restrictions. Turn over a new leaf and give yourself a new investment challenge.
My House is Paid Off Now What Responsibilities Are There?
As we discussed earlier, you are now responsible for the following:
• Property Taxes – Your loan servicer probably took care of it before depending on the agreement you had, but now this is now all on you.
The structure and requirements for property taxes also varies from location to location so you’d need to determine the details of the rate and frequency of payments for your particular property.
• Insurance – Again, your loan servicer probably took care of it before. Now you need to handle it. Get the mortgage providers name off of your insurance documents and direct payments to you.
• Maintenance – This should not surprise you because I’m sure you were doing this even while you were still paying your mortgage. Your home is aging and things would break, need repairing and stuff would need to be replaced.
This is why your contingency savings are important. A good rule of thumb is that you need to be financially prepared to spend up to 4% of your home’s value on an annual basis in home repairs.
• Continue Frugal Living – Budgeting and frugal living should not stop because you have more money. If you don’t manage your money well, it’s easy to waste away. Be smart and continue spending wisely, side hustling and budgeting.
Paid off House Now What to Expect in Terms of a Deed?
Your mortgage provider may or may not outfit you with a deed.
A deed of trust or mortgage deed would have been established when you took the loan, giving the loan provider the legal authority to sell your property in the event you failed to pay.
They are not obligated to send you a deed upon completion of payments. However, they may do so. They should however, send a release of mortgage or release deed to your local registrar or real estate filing office.
You need to follow up to ensure that this is done. Only when the release of mortgage or release deed is filed at the local office, will your property be declared as 100% yours.
My House is Paid Off Now What Happens to My Credit Score?
Your credit score may or may not change after you pay off your mortgage, depending on how you go about doing it. If you clear off your mortgage by paying off a large figure, you would have a large increase on your credit score.
This is because your “amounts owed” would be reduced significantly on your credit report. However, if your credit score is already great, you may not see any improvement.
How to Pay off a Mortgage Early?
Fantasizing about life after mortgage is paid off? Here’s a few tips to pay off your mortgage earlier than initially planned:
If you have the room in your budget, consider refinancing your mortgage to pay a larger monthly figure and to lower the term to a shorter time. This combination is guaranteed to knock off your mortgage faster.
Pay Extra on the Principal Monthly
One of the best and most basic strategies to pay off your mortgage faster is to pay additional money against the principal each month.
Work on your side hustle to earn a bit more money in your spare time. Save more money if you can. Apply this additional money against the principal when you make your payment and your mortgage will shrink quickly.
You need to ensure that you contact your loan servicer and inform them that you’d like to pay the money on the principal to ensure that you get full value for your efforts. You do not want this money to be lost against interest payments.
Pay Extra on the Principal Annually
Similarly to the monthly additional payments on the principal, you can make a lump sum annual payment on it also.
If your company gives annual bonuses or you happen to run into a significant financial windfall, contact your mortgage provider and pay the money on the principal. This is a great use of your tax refunds also.
Recasting your mortgage is a good option to consider if you want to knock off some of the principal with a substantial deposit and reduce your monthly payment, without the complications of refinancing.
Once you are ready to make your final payment on your mortgage:
• Request a payoff quote from your loan provider along with their specific payoff instructions.
• Follow the instructions to make the final payment, whether it is cash, check, wire transfer or whatever they specifically state. Be sure to respect the date and time that the quote is valid for also.
• Obtain your receipts, letter and other evidence of your paid off mortgage.
• Ensure that you follow up with your local registrar or real estate office for the filing of your records.
• Make the additional adjustments to your taxes, insurance and other paper trail deliverables, as discussed earlier.
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Frequently Asked Questions for Life After Mortgage is Paid Off
FAQ: What to do after house is paid off?
You need to ensure that the relevant paperwork is completed! Ensure that the release deed or release of mortgage is filed at the local office for real estate documents.
Additionally, gather all documents from the loan provider confirming that you don’t owe them anything anymore. Once the paperwork is closed off, you can plan for the future, save money, invest and enjoy life!
FAQ: What happens when house gets paid off?
When a house is paid off, the loan servicer presents a release of mortgage or release deed that is filed at the local registrar for real estate documents.
This declares that you are no longer indebted to the loan provider and the house is owned by you, with no rights to it by any other party.
FAQ: What is a good age to have your house paid off?
Most persons pay off for their house in their mid fifties. However, it all depends on when you started paying and your particular terms, conditions and budget.
If you are desperately seeking financial freedom, set yourself a target to be free of all debt, including your mortgage by the age of 45. If you can afford to do it sooner then go for it!
FAQ: Should I keep mortgage documents after paying off mortgage?
You should definitely keep all mortgage documents after paying off your mortgage. They should be stored safely, especially the evidence confirming that you have paid off for it.
If you purchased home owner’s title insurance, keep this safely in case there is any title dispute or defect afterwards.
FAQ: What documents should I receive after paying off mortgage?
A release of mortgage or release deed should be filed. You may not receive this directly but you need to ensure that your loan provider sends this to the local real estate document filing office.
You should request a Certificate of Satisfaction at the office as well.
Your final mortgage statement and a loan payoff letter, from the financial institution that provided your loan, are also valuable documents to receive and save for added security.
FAQ: What do I do with my money after I pay off my mortgage?
You should use your money to strike a balance between: enjoying life with some added luxuries and saving and investing to grow your wealth.
You can also look into contributing to charitable organizations in order to give back to society.
Related Posts on What to Do After Mortgage Paid Off
Final Thoughts on Life After Mortgage is Paid Off
Now you know exactly what to expect from life after mortgage is paid off! Go ahead and take your next step with confidence and enjoy the fruits of your labor!
Remember to continue living frugally, side hustling and budgeting, even though you have the extra money on hand each month. Be sure to make the most of your resources and to enjoy life!
Do you have any other advice for life after mortgage is paid off? Share with us in the comments below. We’d love to hear from you!
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