How to Close a Second Mortgage
A second mortgage is a lien on property that is subordinate to the primary or first mortgage on the same property. In the event of a default, the second mortgage is paid off only after the primary mortgage is satisfied. Once you pay off a second mortgage, there are certain steps you should take to ensure that the loan was properly closed.
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Instructions
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Call the second mortgage holder and ask for a payoff for the loan as of the day you plan to pay off the loan. The payoff should include all of the remaining principle, interest on the principle through the payoff day and any fees or prepayment penalties for which you are responsible. The loan payoff will also detail instructions for making the final loan payment.
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Make the final loan payment, carefully following the instructions listed on the loan payoff. Generally, you are required to wire funds to pay off the second mortgage.
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Wait for the second mortgage holder to send you a satisfaction of mortgage. The satisfaction of mortgage is a legal document that states you have satisfied the terms of the mortgage loan and paid it in full. If you don't receive this document within 30 days, contact the mortgage holder and request the document be sent to you.
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Go to the county recorder's office in the county where the property associated with the second mortgage is located. Bring the satisfaction of mortgage with you. Pay the required fee to file the satisfaction of mortgage document with the county recorder. Some lenders will do this for you. However, it is a good idea to go to the county recorder's office in person to verify that the document is properly filed.
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