Many people have at least one mortgage on their real estate. When you intend to sell your real estate, that mortgage must be released so the buyer will receive clear title. You may wonder, how do I get my mortgage paid off for closing? Do I need to contact the mortgage company to get the payoff amount? Will I need to send the payoff money to the mortgage holder after closing?
We are here to tell you that paying off a mortgage at closing really does not have to be as complicated as it sounds. Our closing agents are used to handling this as part of a regular closing.
A mortgage is simply the document that secures repayment of money borrowed by placing a lien on real estate. The mortgage needs to be paid off and released from the real estate; otherwise, the mortgage will remain with the real estate sold. Nobody wants to buy a house with somebody else’s debt attached! The mortgage may either still belong to the original bank that issued the mortgage, or it may have been sold off to a different bank. It may be a surprise, but it usually isn’t more complicated if the mortgage has been sold. The payoff process stays the same.
What is the payoff process?
The process begins with the Seller completing an information release form for us. This form typically accompanies the deed and other documents for the Seller to sign weeks before closing. It only requires a small amount of information from the seller: current mortgage holder name, loan #, signature, and SSN. In most cases, this document may even be signed electronically and sent back to us. Electronic signatures are a big help, because the sooner we get the completed form, the sooner we can get the payoff quote for the settlement statements.
As soon as we receive the filled-out form, we contact the mortgage holder on the Seller’s behalf. The mortgage holder sends us a statement with the total payoff amount and their wire instructions. We add the payoff amount to the closing statements and send the payoff amount immediately after closing.
After the Closing
After the mortgage holder receives payment, the amount is applied to the underlying debt and a “release” is sent to the county for filing. To complete a seamless closing, our agents will typically add a couple extra days-worth of interest in order to make sure enough funds are sent to secure a release of the mortgage. If there are any excess funds, the lender will refund them to the Seller.
If the Seller has set up automatic payments, he or she should contact the mortgage company to cancel the payments following closing. Also, prior to the closing date, the Seller should be aware of when payments are due. If a payment is not made within the grace period, late charges may be applied.
Our closing agents are always happy to answer any questions you may have about the closing process. Give us a call today or visit our website www.tallgrasstitleks.com.