Want to burn your paid-off mortgage? Be sure it’s fully satisfied by doing these things

A couple of years ago, the congregation of the Metropolitan Community Church of the Palm Beaches in Florida celebrated making the final payment on the church’s mortgage by burning the document.

It’s a ritual that dates back more than a century. In the 1900s, observing the end of a borrower’s promissory note by lighting a match to the papers was a big deal, often celebrated at a party with friends and family. Nowadays, it seems like only churches observe that rite. Christ Our Redeemer Church in Irvine, California, did so when it paid off its loan in 2011, and the Mt. Pisgah Baptist Church in Orangeburg, South Carolina, did the same in 2022.

Few homeowners celebrate the end of their financing these days, for several reasons. One: Not that many people actually carry their mortgage to its full term. Best-guess estimates in the industry suggest that less than 16% of all home loans reach maturity. And two: Holding a mortgage-burning party is now considered rather gauche.

In a 2010 column, Miss Manners, the prime arbiter of etiquette, wrote that these parties fall into the “self-congratulatory” category, and are therefore in poor taste. If you still want to lionize the event, some suggest only immediate family should be invited.

But this advice columnist has a different take: Party or not, don’t take a match to your mortgage when you make your final payment. At least not immediately. There are several precautions you should take first. For starters, call your lender about a month after you make your last payment to make sure you have really satisfied your obligation. You may not be as current as you think.

For example, if a longago payment never made it to the lender’s mailbox, you may actually be a month behind. Perhaps a charge is still outstanding for a missed or late payment. Or maybe the escrow accounts the lender uses to pay your property taxes or homeowner’s insurance are a tad light, and there’s not enough in the till to cover them one last time.

Once you determine you are actually free and clear, your lender is supposed to return your original mortgage and note, along with something known as a “satisfaction of mortgage” document — similar to the notice auto lenders stamp on the title to your vehicle when your car loan is paid off.

But there’s a big difference: While a rubberstamped statement is proof enough for most states that your car lien is paid in full, the satisfaction piece, as some lawyers call it, is a legal document that should be filed at the county courthouse. Otherwise, title companies will be unable to verify that your loan has been paid. And if they can’t do that, they won’t be able to issue a clear title if and when you try to sell the place.

While that may seem like the buyer’s problem, it’s yours. In most cases, subsequent lenders won’t close if there is a quirk in the title. Your sale can be held up for as long as it takes to clear the air — which could be quite some time. In some cases, according to title attorneys, sellers have had to sue their lenders to prove they’ve met their obligation. If the lender is no longer in business, verification is even more difficult.

When you call your lender, also ask about the procedures regarding the satisfaction document. Some lenders will file the notice with the county as a matter of practice, but others leave it to borrowers to do so. If your lender is the do-it-yourself variety, take the satisfaction statement to your local recorder’s office — or, in some cases, the registrar of deeds — for inclusion in the public records.

But just in case, make sure the original document is returned to you, along with the filing date and time stamped (or otherwise noted) on the form.

Once you are sure the loan is totally satisfied, go ahead and celebrate. But title professionals suggest using a copy of your mortgage, not the original document. “Never, ever destroy any of the documents associated with buying or selling a house,” one executive advised me years ago. “If you want to burn something, burn copies. It will make you feel just as good.”