Making your final mortgage payment can feel like getting an enormous raise. If you’ve been sending the lender $1,800 every month, seeing that obligation disappear may immediately have you imagining what else you could do with the money. But part of that old payment may have been escrow for property taxes and homeowners insurance… all expenses that don’t vanish just because the mortgage does. The Consumer Financial Protection Bureau explains that a typical total mortgage payment can include principal, interest, homeowners insurance, property taxes, and sometimes mortgage insurance, with taxes and insurance frequently collected through an escrow account. Think of principal and interest as the mortgage cost that disappears; taxes, insurance, maintenance, and other property expenses are homeownership costs that remain. That makes budgeting after paying off a mortgage more complicated than simply deleting your old house payment and spending the difference.
