DEFINITION of 'Satisfaction of Mortgage'

A document generated and signed by a mortgage lender, acknowledging that the borrower has paid off the mortgage loan in full and that the mortgage is not a lien on the property. The Satisfaction of Mortgage document must be filed with the county office or land registry office in order to get the property deed updated and to obtain clear title to the property. 

BREAKING DOWN 'Satisfaction of Mortgage'

Getting the Satisfaction of Mortgage from the lender can take a few weeks after the final mortgage payment has been made. In the event that no Satisfaction of Mortgage is recorded despite the mortgage having been paid off in full, the property will continue to show a lien against it. Most U.S. states stipulate a penalty for the lender if a Satisfaction of Mortgage is not filed within a reasonable period of time after a mortgage debt is discharged in full.

Many financial planners recommend accelerating mortgage payments in order to pay off the mortgage faster. Making the occasional extra mortgage payment – assuming the lender allows it without penalty – can slash months off the mortgage term and save thousands in interest costs. A viable strategy to expedite paying off a mortgage will help homeowners get the coveted Satisfaction of Mortgage document even sooner.

The Satisfaction of Mortgage is also useful if the owner wants to pledge the property as collateral for a business or personal loan. Of course, the merits of taking out a loan using the house as collateral, after spending decades paying off the mortgage, should be thoroughly considered before being done.

Note that even if the mortgage loan is paid off in full, if other liens such as tax liens are attached to the property, they will continue to remain in place.

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