When a mortgage is fully paid off, a Satisfaction of Mortgage document is the legal proof that the mortgage is finished and the title is clear of liens. This document must be filed with a local authority like a county recorder or city registrar, depending on the state and local requirements.
Understanding the importance of this document can help homeowners retain the correct documentation on the off chance that a wire gets crossed and someone thinks they still owe mortgage payments to a lender when they have already completed the mortgage.
Definition and Example of a Satisfaction of Mortgage
A Satisfaction of Mortgage is issued when the full term of your mortgage is complete or when you’ve paid ahead on your mortgage to the point where the entire balance is paid off. While you will receive notification of this document’s creation, the official documentation is usually filed with a local authority. These can include entities such as a county recorder or recorder of deeds, but you can talk to your specific lender about the local or state requirement in your area.
This document is a key to updating your credit history and records of ownership for a given piece of real estate. Without it, the title to your property may contain an out-of-date lien from the lender, which can result in confusion about ownership and potentially impact your ability to sell or refinance. Completing your mortgage loan and having a Satisfaction of Mortgage filed is an official documentation stating that you don’t have that debt anymore and the home has a clear title.
- Alternate names: discharge of mortgage, release of mortgage, cancellation of mortgage
For example, let’s say you recently made your last payment on a 30-year mortgage. Your mortgage lender should prepare the Satisfaction of Mortgage document, have it signed and notarized, and file it with the appropriate authorities. You can then use this document to prove you own your property outright and there are no liens against it. This will be necessary if you intend to sell the property or use it as collateral for a new loan.
How Does a Satisfaction of Mortgage Work?
Your lender is charged with handling the Satisfaction of Mortgage paperwork, and what they have to do will vary based on where you live and which laws govern that documentation. Without this filing, you may run into issues with a title search if you go to sell the property in the future.
After 15 or 30 years on a typical mortgage loan, you’ll pay the last payment on the mortgage. At this point, the mortgage lender will issue you an official notice that they have completed the mortgage loan, your title is clear of any liens, and they’ve filed the appropriate Satisfaction of Mortgage paperwork with the local authorities. If there are any other details related to discharging the mortgage that you need to know, they’ll send them at this time.
The documentation they send you that the Satisfaction of Mortgage has been filed will come in handy if you choose to borrow against your home in the future. This means demonstrating that the home is a fully-paid-for asset, and therefore makes loaning money to you safer than if you owed a substantial amount on that property.
Another circumstance where the Satisfaction of Mortgage can be helpful is when you make extra payments on your mortgage, finishing payments faster than the planned term of the loan. Your lender could contact you with a question as to whether you still owe payments.
Keep track of all extra payments and retain the documentation you receive about the Satisfaction of Mortgage, so you can prove you aren’t missing any payments.
How to Get a Satisfaction of Mortgage
Your lender should file a Satisfaction of Mortgage with the appropriate authorities and you should receive documentation that the loan has been completed simply by paying off the final payment. What you’ll actually receive, however, will vary by jurisdiction.
For instance, in Suffolk County, New York, the County Clerk sends a postcard informing homeowners when a Satisfaction of Mortgage is filed on their property. Many people bundle their property tax into their mortgage payment, so this notification first and foremost shows them that they’ll need to make another arrangement to pay their property tax now that they aren’t making mortgage payments. Your individual lender would also send you paperwork confirming this filing.
If you don’t receive documentation, however, you can reach out to your lender and ask what typically happens in this process and ask for documentation that the lien on the property has been released.
Lenders typically want to file these promptly because the cost and time involved in filing them after the fact is higher. However, if your lender has gone out of business, you might consider going through the FDIC’s failed bank lien release process to get your Satisfaction of Mortgage.
- A Satisfaction of Mortgage is a signed document filed with a relevant local authority that verifies a mortgage loan has been fully paid off and is no longer a lien on your title.
- This documentation can be helpful if you want to use your home as collateral for a new loan.
- The lender should file the Satisfaction of Mortgage, but if you don’t receive any information about it, you should check to make sure it has been completed.