How Can You Use a Home Equity Loan to Pay Off Your Mortgage?

A home equity loan is a loan. Equity is the value of the home less the amount owed on the mortgage. Your lender will utilize an appraisal to determine your home’s value and the amount of equity available to borrow. In the event the available equity surpasses your mortgage balance, you can use an equity loan to repay your mortgage. In case your mortgage exceeds the available equity, then you cannot use the equity to repay your mortgage. Different lenders offer different loan-to-value ratios, interest rates and provisions, so shop around to find the best deal. Deposit your loan proceeds in your checking account so that they are available when you are ready to pay off your mortgage.

Contact your mortgage lender to get your payoff level. Your mortgage lender will say that the entire principal, interest and interest due. Your mortgage lender may even tell you a date whereby the quoted sum is good, called the”payoff good through” date. You must request a new payoff estimate from the lender if you haven’t paid the mortgage off by the”payoff good through” date.

Make a check out for your mortgage lender to the payoff sum. Send the check by overnight mail for a mortgage lender’s payment speech before the”payoff good through” date.

Contact your mortgage lender following the check clears to verify that your payment was applied to your mortgage and that you have a zero balance. Confirm with the county recorder’s office that your lender has listed the Satisfaction of Mortgage document within a month of submitting your payment. Expect to receive from the lender a Satisfaction of Mortgage document stamped”paid in full” within a month of paying back your mortgage. Store the document with your significant papers.

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