Q: We are close to making our final mortgage payment on a condo in my name. The mortgage is in my name because I bought it before we married, but we have jointly made the mortgage payments. Any advice on the final payment, good procedures to follow, and if there’s a simple, inexpensive way to put the condo in both our names? — Paula
A: Congratulations! Paying off your mortgage loan is a cause for celebration.
First, you should contact your lender to confirm the amount. Your loan may have some remaining fees or costs you are not expecting, and it is best to avoid a late fee or other problems because you still owe a few dollars.
When you initially closed on your mortgage loan, you signed various documents, including disclosures, affidavits, agreements, a mortgage and a promissory note. While everyone talks about making their mortgage payment, they are actually repaying the loan they made by signing the promissory note.
The mortgage is the security instrument that allows the lender to foreclose if the borrower breaks the loan agreement, for example, by not making payments. A borrower repays their promissory note so their lender does not have to use its mortgage.
In most cases, your promissory note is a “negotiable instrument,” which is a signed document where a borrower promises to repay a certain amount of money to a specific party.
A check from your bank account is an example of a negotiable instrument, as is a promissory note. Both promise you will pay a certain amount to a specific person.
Just like you can transfer a check made to you by endorsing the back of it, your lender can endorse your promissory note to another lender. If your bank “sold your mortgage” and you had to pay a new lender, this is what happened.
Because your original promissory note has legal significance, once you fully repay your loan, your lender will mark it as “canceled” and mail it back to you.
Occasionally, the originals get lost, and instead, your lender sends you different documents stating you fulfilled your obligation. You should save these documents for at least five years in case you need to prove you fully paid your loan.
Changing the title of your home is an important legal decision. That said, depending on your situation, adding your spouse to your home’s title is often a good idea as it provides certain protections and assists in estate planning. You will need to deed the property to yourself and your spouse while observing the formalities required by where you live.
In Florida, it must be witnessed, notarized, and recorded in the county’s official records.
Preparing and recording a deed like this typically costs little, and you should contact a local attorney to assist you.
Board-certified real estate lawyer Gary Singer writes about industry legal matters and the housing market. To ask him a question, email him at gary@garysingerlaw.com, or go to SunSentinel.com/askpro.
