When that happy day comes where you make the last payment on your mortgage, there's a whole new world that is opened up to you in terms of the things that you can do with the money that you'll be saving instead of putting it into those mortgage payments. This is a good thing, a very good thing, and should be celebrated without a doubt. That being said, there are also going to be some new responsibilities that will be coming your way when you are looking at what changes when you mortgage disappears forever. Let's tackle them one by one.
Let the lenders know that it's done: The first step is letting your lenders know that you have actually paid off the mortgage. This sometimes will require you to do things a little differently, like pay the last payment in a different method or other little things that need to be done right. Make contact before you make that last payment and make sure you've got everything done correctly to avoid as much headache as possible for your benefit. So, notify everyone beforehand and after, so that there are no surprises.
Get back any deposit that you are owed: Since a lot of lenders require a deposit, you are now entitled to get that back. You can make arrangements with your lender to get that amount paid back to you in full, which is partially why you need to follow the procedure highlighted above. This lump sum will make this mortgage completion all the sweeter.
Find a safe spot and arrange all of the finalizing paperwork coming: There's going to be paperwork heading your way that needs to be carefully saved and protected. This includes a record of a cancelled mortgage/lean that serves as a verification that you have paid.
Remember that not all bills are going to stop: Sure, now that the mortgage is paid off, you can breathe a bit, but you must also remember that there are still going to be bills coming your way including property tax and home insurance. You must make sure that these monthly/yearly charges are budgeted for so that you can absorb them and focus on making sure that they are paid for properly.d back your loan in full, so you are going to need to keep it all safe. Just like your other important paperwork, it's critical that this be in order as much as possible and protected in a fire-proof safe or other equivalent.
Switch the insurance and property tax to you: Speaking of those two aspects, you must make sure that you focus on switching these responsibilities over to yourself. While you have a mortgage, most lenders will pay the bills on behalf of you to their respective locations and in the proper amounts. This will now be transferred to you, so you'll need to sort that all out for a payment plan and focus on making sure the amounts are allotted for in our budget.
Use the mortgage money wisely: Now the fun part! Deciding what to do with the leftover money that you'll be able to enjoy each month when it comes to the amount left over after the home insurance and the property tax in terms of budget.
- Put it into a repair fund: Since your home is probably older, having been paying off your mortgage for 10+ years, you'll be able to use the extra money that you have left over form your new bills to put into a repair fund. Maybe it's for a new roof, maybe it's for an upgrade to your electrical or plumbing system. Maybe there's a renovation you've been wanting to do for ages. These funds will help you get there, and since you are already used to paying your mortgage for so long, you won't find that you'll miss the money that is going into it. Using the extra money to invest into your home in some form is a great idea.
- This may not seem as important, but when that hard time hits for whatever reason, it could make a massive difference. This would be a great option, too, for a new savings account for “a rainy day”. That's the whole thing about an emergency fund, it's for whatever you need it.
- Consider using it as an emergency fund: When emergencies happen (whether they're car-related, home-related, or personal) an emergency fund helps ease the financial woes that they tend to bring along with them. Consider using the extra money for an emergency fund for those situations where you simply need to have some extra cash to help things out.
- Consider it as an add-on to your retirement fund: Modern day workers know that a retirement fund isn't always enough to life off of in terms of simply using that in its entirety. So, when you are looking to refinance yourself, you can put as much of this no longer needed mortgage payment money into your retirement fund and enjoy the bump that it is going to give you and your future. If you've got the funds to do it now, than you may as well make as much use out of them as possible, right? It can make your golden years that much sweeter with the extra cash tucked away.
Making that final mortgage payment and focusing on getting all of your home-related affairs in order is a satisfying feeling that not a lot of people get these days. As such, it should be celebrated accordingly. When you are looking to make smart decisions with your funds, however, these tips will help you move in the right direction to make sure the celebration just keeps on happening into the future. Maybe some of these things were a surprise, or maybe you already knew what there is to know, but this will help lead you in the right direction nonetheless.
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