What Is a 15-Day Payoff Statement for a Loan?
Master the 15-day payoff statement for loans. Ensure accurate, timely loan closure with this essential financial document. Learn its importance and use.
To fully satisfy a loan, whether through scheduled payments or an early lump-sum payment, knowing the exact amount required is important. A simple review of the most recent monthly statement will not provide this precise figure. Instead, an official document from the lender, known as a payoff statement, is necessary to determine the exact amount to close the loan. This statement accounts for all financial components up to a specific date, ensuring debt resolution.
Understanding the Payoff Statement
A payoff statement is a document from a lender specifying the exact amount to pay off a loan on a particular date. This amount differs from the current balance on a regular monthly statement because it includes interest that continues to accrue daily, along with any outstanding fees or credits. The “15-day” aspect refers to the typical validity period of the quoted payoff amount.
The amount needed to satisfy a loan changes daily due to the accrual of interest. This daily interest is calculated on the outstanding principal balance. Lenders provide a “good-through” date on the statement, indicating the specific date until which the quoted payoff amount remains valid.
Beyond the principal balance and accrued interest, a payoff statement itemizes other charges that may be due. These can include late fees, uncollected payments, or prepayment penalties. The statement also provides clear instructions on how and where to send the final payment, ensuring correct application of funds.
Requesting and Using a Payoff Statement
Requesting a payoff statement involves contacting the loan servicer directly. Borrowers can request this document through an online portal, phone, or written request. Providing loan details, like the account number, facilitates the request.
The 15-day payoff statement is important in real estate transactions, like selling a property or refinancing a mortgage. In these scenarios, a title company or closing agent requests the statement to determine the exact amount to pay off the existing loan. This ensures the seller’s debt is settled and the property lien is released, allowing for a clean transfer of ownership.
The payoff amount must be received by the lender on or before the “good-through” date. If the payment arrives after this date, the amount may no longer be sufficient due to additional interest accrual, requiring a new quote. Once the loan is fully satisfied, the lender is responsible for releasing the lien on the property, confirming the debt is cleared.