What Is A Mortgage Maturity Date And How Does It Work?

When you sign on the dotted line for a home loan, you’ll find a mortgage maturity date listed in your documents. A loan’s maturity date is when your loan is scheduled to end if you make all your regular payments on time. As a new homeowner, it’s natural to wonder what a mortgage maturity date is. Let’s explore what this important time means for your finances.

What Is A Mortgage Maturity Date?

A mortgage maturity date is the exact date that the borrower is expected to make their final mortgage payment. The maturity date is usually the same length as your loan’s term and falls on the day of the year that you closed on your loan.

If you stick to the designated repayment schedule, you should finish paying off your mortgage on your mortgage maturity date. With that, you’ll no longer have a mortgage payment as a part of your monthly budget.

Mortgage Maturity Date Vs. Mortgage Amortization

The maturity date on a mortgage is the point in time when your loan term ends and you’re expected to make the final payment. Mortgage amortization, on the other hand, refers to the process of gradually paying off your mortgage through regular monthly payments over the life of the loan. While amortization is the process of repayment, the loan maturity date is the culmination of this process.

An amortization schedule breaks down your monthly mortgage payments, where the maturity date represents the final payment date. So, if you took out a 30-year home loan, your amortization schedule will show 360 monthly payments – where the 360th payment falls on is your maturity due date.

How Maturity Dates Work For Most Mortgages

When you finalize your mortgage loan, a mortgage maturity date will be specified. Typically, mortgage loans will mature at the end of the loan term.

For example, let’s say that you took out a conventional mortgage with a 30-year loan term on January 1, 2020. With that, the mortgage maturity date will likely be exactly 30 years from the day you took out the loan. In this case, the maturity date is January 1, 2050.

If you stick to the predetermined repayment schedule, you’ll be mortgage-free when the loan matures at the end of the loan term. Some lenders impose an early prepayment penalty, which involves a fee for paying off your loan before the mortgage maturity date.

How Maturity Dates Work For Balloon Loans

A balloon loan involves making a large lump sum payment after the loan term. The lump sum payment will cover any remaining loan principal and interest that you accrued over the full loan term. Although a balloon loan’s maturity date sometimes aligns with the loan’s term, that’s not always the case.

For most balloon loans, you’ll be required to make a large lump sum payment at the end of the loan term. But balloon loans come with an extra layer of risk. Unlike a regular mortgage with consistent monthly payments, you’ll face a large payment at the end of the loan term.

For many households, saving up for a payment that could easily amount to thousands of dollars is a challenge. If you aren’t able to cover the balloon payment, the lender may have the right to foreclose on the loan.

The financial stress created by balloon loans usually makes these a last resort for prospective home buyers. Some mortgage lenders, like Rocket Mortgage^®, don’t offer balloon loans due to the unnecessarily high risk of default for many home buyers.

How To Figure Out The Maturity Date For Your Mortgage

As a homeowner, you can figure out the maturity date for your mortgage by consulting your original loan paperwork. In some cases, the maturity date will be spelled out in your paperwork.

If you don’t see the maturity date in your mortgage documents, you’ll need the date you took out the loan and the loan term to figure out your maturity date. For example, if you took out a 15-year home loan on March 1, 2020, then your mortgage maturity date is March 1, 2035.

What Happens After The Mortgage Maturity Date?

You'll make your final mortgage payment when you reach the mortgage maturity date. If you’ve maintained your minimum payments, this final installment indicates that you’ve satisfied the terms of the loan. After repaying the lender entirely, you now own the house outright.

Once the mortgage is paid off, your lender will provide you with documents to confirm the loan’s repayment. These typically include a mortgage release or satisfaction of mortgage document, which proves that the lien on your property has been removed. The information also shows that you no longer owe money to the lender and the property is fully yours.

For homeowners, the mortgage maturity date is often a cause for celebration. Imagine what you can do with the newfound wiggle room in your budget when your mortgage is paid off.

How To Change Your Maturity Date

As a homeowner, it’s possible to change your maturity date by coming to a new agreement with your lender. An extension on your maturity date could give you the time you need to repay the loan in full. Plus, extending your maturity date may also help you lower your monthly payments.

Let’s take a look at some of the ways you may be able to change your mortgage maturity date.

Mortgage Refinance

Borrowers who refinance their home loan can extend the maturity date. When you refinance, you’re essentially replacing your existing mortgage with another mortgage. The mechanics involve paying off your current mortgage with the proceeds from your new home loan.

If you refinance into a loan with a 30-year term, the new loan comes with a new mortgage maturity date. Many borrowers consider refinancing as a way to lower their monthly payments or change their loan terms to better fit their financial needs and goals.

Loan Modification

In contrast to a refinance, a loan modification doesn’t require you to pay off your current mortgage to replace it with a new one. Instead, a loan modification involves directly changing the details of your existing loan. Your current mortgage lender needs to approve the loan modification.

Through a loan modification, you can extend the loan term or seek a lower interest rate. If you’re worried about defaulting on your mortgage, for instance, your lender might be able to work out a loan modification that better suits your finances.

Loan Forbearance

Mortgage forbearance may not change the maturity date, but it can help you avoid defaulting on the mortgage, which means you can stay in your home. Essentially, mortgage forbearance occurs when the lender allows you to pause or reduce your payments for a specific period of time.

After the forbearance period ends, you’ll be expected to catch up on your missed payments. Your lender will determine how long the forbearance period lasts based on your situation and when you’ll need to catch up on the payments.

If you enter forbearance, it’s worth looking into loan modification options offered through your lender. In many cases, homeowners in forbearance choose to extend their loan’s maturity date and lower the rest of their payments. Although this may mean paying more in interest over the life of the loan, it might be the right move for your budget.

The Bottom Line

Your mortgage maturity date is when you’ll make your final home loan payment if you’ve paid according to your original mortgage schedule. You’ll know this date when signing your mortgage. If you require assistance in meeting your monthly payments, talk to your lender about your options as soon as you can.

If you want to extend your mortgage maturity date, you might consider refinancing your mortgage. If this sounds like a viable option for you, start your refinance application today.