Questions on mortgage payoff process

[marcus_aurelius]

Happy Friday! We’re preparing to pay off the remaining $130K mortgage on our primary residence this month. I know how to generate the payoff statement but still have the following questions:

• What’s the process I will need to follow?
• What documents should I make sure to get from my lender (provident.com)?
• Are there any b.s. hidden charges I should be aware of?
• Also not sure if this is a factor, but the house is part of our living trust. Any special paperwork or process needed for that?
• Any other points I should know of?

Thank you.

[marcus0aurelius]

Ave Imperator,

When I did mine I just made a lump sum payment so the remaining balance was about half of one months payment. The next month auto pay finished it off. A couple weeks later I got the loan termination confirmations in the mail. I probably should have checked with the county that the lien was removed but I didn't. This was pretty easy since we had a checking account with the lender and everything was on autopay.

Since that payoff we've moved and have another mortgage, recently refinanced to 2%. We plan to run it out till the end this time despite having the cash to pay off.

[Catbert]

We did what Marcus did - paid lump sum and let the next auto pay take the rest

[Maverick1]

When we paid our mortgage off I went into the bank and asked to pay it off. They calculated the total amount owing including accrued interest up to that day.

If you deal with an online bank I’m sure there’s a number you could call.

Most banks have prepayment penalties but allow a certain % to be prepaid per year. As long as you’re within that limit there should be no hidden charges.

[JJ-]

Here's another vote to picking up the phone to call.

The fees should be listed in the documentation provided to you by your servicer. Sometimes it can be looked up online. Things like $25 for a faxed payoff statement or $300 for re amortization would be listed there.

The mortgage docs should also list whether there is an early payment fee.

Re the trust, was the mortgage written in the name of the trust or did the lender do a swap out of the trust for funding then file it back into the trust the following day? In either case, my non legal assumption is that there is nothing special here. I'd update my financial sheets for my trust stating there's no mortgage on the property for whoever comes in to execute, though.

[Dicey]

Through a combination of good luck, autopilot investing, and mostly doing nothing, our portfolio has grown big enough for me to worry about capital preservation instead of purely growth.

Here’s a summary:
I’m 47, my wife is 45. Living and working in the VHCOL SG Bay Area. Not looking to retire in the next few years -- we both like our jobs.
401K, IRA combined: $1.65M in Vanguard target year type retirement accounts.
Taxable stocks: $1.35M (~$250K in Vanguard index funds, $150K in REITs, rest in individual tech stocks. Yes, I stock picked a lot a few years ago, mainly in AMZN, MSFT, AAPL, GOOG etc. Not really because I knew what I was doing, but it worked out for me.)
$120K in 529s for two kids. College is 2 and 5 years away.
House: $180K mortgage remaining on a house worth $2.3M (average home in the Bay Area, nothing fancy. We don't plan to move out. We'll pay it off in ~3 years.)

I’m becoming more worried about the huge risk I’m taking with my taxable account due to its focus on technology. Plus, although I don't need a lot of money anytime soon, there are the tax implications too when I gradually start taking this money out. Any recommendations? Should I talk with a financial advisor or money manager? What would you do?

Whew, that was a fast ~3 years! What changed your mind?

[Morning Glory]

When we paid our mortgage off I went into the bank and asked to pay it off. They calculated the total amount owing including accrued interest up to that day.

If you deal with an online bank I’m sure there’s a number you could call.

Most banks have prepayment penalties but allow a certain % to be prepaid per year. As long as you’re within that limit there should be no hidden charges.

I've had at least 6 mortgages and not one of them had a prepayment penalty.

[AccidentialMustache]

Most banks have prepayment penalties but allow a certain % to be prepaid per year. As long as you’re within that limit there should be no hidden charges.

I've had at least 6 mortgages and not one of them had a prepayment penalty.

Some states don't allow lenders to tack prepayment penalties on mortgages.

[marcus_aurelius]

Thanks for all the replies. After reading your replies and a call with Provident, I decided to pay a large lump sum and let the next auto pay take the rest. We don’t have prepayment penalties.

Whew, that was a fast ~3 years! What changed your mind?

Basically, my wife made a lot more money in Stock Appreciation Rights from her employer this year. We weren't expecting this. This mortgage payoff brings down our emergency fund to "only" $45K but with no mortgage, we don't need a large fund. And although our mortgage is just 2.5%, I happen to think that the current stock market is somewhat overvalued so I didn't want to invest a large lump sum. We’re still continuing to invest 15% in our 401Ks and ~$7K per month in post-tax investment.

[Dicey]

Thanks for all the replies. After reading your replies and a call with Provident, I decided to pay a large lump sum and let the next auto pay take the rest. We don’t have prepayment penalties.

Whew, that was a fast ~3 years! What changed your mind?

Basically, my wife made a lot more money in Stock Appreciation Rights from her employer this year. We weren't expecting this. This mortgage payoff brings down our emergency fund to "only" $45K but with no mortgage, we don't need a large fund. And although our mortgage is just 2.5%, I happen to think that the current stock market is somewhat overvalued so I didn't want to invest a large lump sum. We’re still continuing to invest 15% in our 401Ks and ~$7K per month in post-tax investment.

Though I'm a founding member of the DPOYM Club, in your case with ~ 5M NW, paying off the mortgage is no big deal. My question was in no way critical, I just wondered what led to such a quick change of heart. Congratulations!

[MissNancyPryor]

Fee: 

You might have to pay a small reconveyance fee to the bank as they close the loan, maybe a couple hundred bucks, which they may include in the pay off quote or might charge separately.  Damned fine print. 

Congratulations!