Congratulations! Paying off your mortgage is a huge life accomplishment. An accomplishment many people spend thirty years or longer trying to accomplish.
While you will find a wealth of resources discussing the importance of timely mortgage payments, you rarely hear about what comes next. You know, after you have completely paid off your mortgage.
You’ve probably been paying your mortgage for so long that you’ve stopped dreaming about what life will be like once you’ve made your final mortgage payment.
Let’s find out!
Update Your Insurance and Taxes
Since you’re no longer paying a mortgage, these payments are no longer being handled by your mortgage holder. There’s a good chance you will have a little money left over in your escrow account as a sort of parting gift from your mortgage lender.
But, don’t get too excited…
This is money you’ve essentially prepaid for your taxes and insurance, but it can help you get started as you transition to making these monthly payments on your own each month.
Now is also a good time to explore your insurance coverage to see if you’d like to make changes. It is also essential that you notify your insurance company that you will now be paying for your insurance directly and set up your accounts to do so.
Property taxes are a similar story. You are now responsible for making those payments and need to determine when, where, and how much you owe each year for property taxes and where to pay them.
Also, don’t forget that once you no longer have a mortgage to repay, you no longer have the benefit of a mortgage interest deduction for your income taxes, so you’ll need to account for that in addition to the property tax changes you need to make.
Decide How to Use Extra Funds
Now that you’re no longer paying a mortgage payment each month, it might feel like you’re rolling in the dough. You will certainly have a little more disposable income to manage each month which leaves you plenty of options for the future, including the following:
- Pay off your debts.
- Create an emergency fund or supplement your own existing emergency fund.
- Maximize your retirement savings.
- Make investments.
- Sock it away for a rainy day or set money aside to pursue your dreams.
Perhaps the best plan for these extra funds is to do some combination of all of these. It gives you greater control over your future finances while allowing you to set aside money for short-term goals and a little fun in the meantime.
Monitor Your Credit
Now is a time when you need to be particularly vigilant about managing and monitoring your credit score. Not only does your credit score need to reflect that you now have a completely paid off mortgage, but you also need to make sure there aren’t things on your credit report that should not be. It is a huge first line of defense against identity theft you need to consistently monitor.
Adopt a perpetual “Boy Scout” state of mind. Always be prepared. Now that you’ve paid off your mortgage, there are other storms in life you may need to weather. Paying off your mortgage puts you ahead of the game in many ways. Stay there. By saving your pennies and preparing for whatever life throws your way. The more planning you do before you’ve paid off your mortgage in full, the better prepared you are when the big day arrives.
Mid America Mortgage can help you with your mortgage payment and other financial needs. Contact us today to learn more about how to safeguard your financial interests while paying for your mortgage and during your life after leaving mortgage payments behind.