What Is a Loan Reconveyance Fee?

Home loans come in two parts. The first part of the loan is the promissory note, which is your promise to repay the loan. The second part of the loan is the mortgage or trust deed, which is a document that lets your lender put its hooks into your property. If you don't pay the loan, the mortgage or trust deed lets the lender foreclose. That risk goes away when you pay the loan off and the lender gives you a reconveyance.

How Payoffs Work

When you pay off your loan, you've fulfilled your promise under the promissory note. Since the note is no longer valid, the lender formally gives up its right to take your property for not paying on the loan by signing a document called a reconveyance. The reconveyance gets recorded on your property's title, clearing the lender off once and for all.

Reconveyance Fees

As with most things, lenders usually don't do reconveyances for free. As such, most loans will carry a reconveyance fee that the bank charges for its time and effort in generating, signing and delivering the reconveyance. Typically, these fees aren't onerous. While they vary, as of Sept. 2013 you can generally expect to pay around $100 or so for a reconveyance.

Reconveyance Recording Fees

Since the mortgage is recorded against your property's title with the records in your county or other similar government entity, the reconveyance also has to be recorded to cancel it out. Most country recorders charge a fee to record documents. That feel is also passed along as a part of the cost of paying off your loan, usually as a "recording" or a "reconveyance recording" fee.

Wire and Delivery Fees

Paying off your loan can carry some other fees, as well. Typically, final payments are sent via wire transfer. A wire transfer is a special highly-reliable way of sending money between banks and sometimes carries a fee. In addition, if documents have to be sent via overnight delivery or courier, you may also be charged a fee for the delivery. As with reconveyance fees, these fees usually are relatively minimal.

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