Start the process by contacting the company that services the mortgage. They can answer all your questions.
- Does the process basically just involve sending in money or are
there other documents that must be exchanged?
They should have a form that needs to be submitted. You will want to get from them the most up-to-date payoff amount X days from now. The amount changes each day.
They will be sending you a document signifying that the debt has been met. They will also be filing paperwork with the county/city/township releasing the property from the mortgage obligation.
- Is the payoff usually paid with a regular check or with a cashier's
check, bank wire, etc.?
Because all my mortgage payoffs have either been or refinancing or I have sold the property, the balance due was significant and the lender required a cashiers check. Contact them to ask. If it only a few thousand left they might take a regular check.
- I see that a payoff amount is associated with a particular date, presumably because of interest calculations. Does this imply that
checks are usually send by overnight delivery in order for them to
arrive exactly on the designated date, and what happens if they arrive
Sending the checks via overnight delivery speeds up the process, and cuts down on the uncertainty of the delivery date. Ask for a return receipt so that you have proof of the date it was received. Overpay by a couple of days. They will refund the overage.
- Let's say my mortgage balance is $4500, and my monthly payment is usually $1000. What would happen if I just continued to pay monthly
bills instead of requesting a final payoff? Would the mortgage company
eventually send me a final bill that would work like a final payoff?
If you let the mortgage run its course, you will still get a document back from them; they will still file the documents with the local government; and they will refund any overage. If you look at the coupon book, or the paperwork they gave you at settlement the last payment is usually a different amount due to rounding of the monthly payments.
Of course if you have been making extra payments or larger than required payments the numbers on the original coupon book are moot so contact the company for the last payment amount.