What Is a Mortgage Payoff Letter and How to Get One

A mortgage payoff letter is an important document in real estate transactions, confirming the exact amount required to fully satisfy a home loan. This official statement provides clarity and certainty for homeowners planning to sell their property, refinance their mortgage, or simply pay off their loan ahead of schedule. Understanding the components of this letter and the steps involved in obtaining it helps ensure a smooth financial process.

Understanding a Mortgage Payoff Letter

A mortgage payoff letter, also known as a payoff statement, is an official document from a mortgage lender detailing the precise amount needed to completely pay off a mortgage loan on a specific date. This amount typically differs from the outstanding principal balance shown on a regular monthly statement because it includes all accrued interest and any applicable fees up to a future payoff date.

The letter itemizes several key pieces of information. It includes the loan number and the property’s address. The outstanding principal balance, accrued interest calculated up to the specified payoff date, and per diem interest are included. Per diem interest represents the daily interest charge that continues to accrue on the loan.

Any additional fees, such as late fees, processing fees, or prepayment penalties, are also itemized. The letter specifies a “good-through date,” which is the date until which the stated payoff amount remains valid. This date is important because the exact payoff amount changes daily due to the accrual of per diem interest. The letter also provides instructions for making the payoff payment, including details for wire transfers or mailing addresses for certified checks.

Requesting Your Payoff Letter

Requesting a mortgage payoff letter from your lender involves several methods. Many mortgage servicers offer online account portals where homeowners can log in and request a payoff statement directly. Alternatively, a request can be made by phone through the lender’s customer service line or by submitting a written request via mail or fax. Third parties, such as a title company or an attorney involved in a home sale or refinance, can also request the letter on the borrower’s behalf, often requiring borrower authorization.

When making the request, the borrower will need to provide identifying information to the lender. This typically includes the mortgage loan number and the property address. It is also helpful to state the reason for the payoff, such as a home sale or refinancing, and specify the desired good-through date for the payoff amount. This requested date allows the lender to calculate the precise amount, including per diem interest, that will be due on that specific day.

After submitting the request, the typical timeframe for receiving the payoff letter is generally within seven business days. However, this can vary, with some lenders providing it within a few business days, while others may take up to a week. It is advisable to request the letter well in advance of the anticipated payoff date to allow ample time for processing, delivery, and any necessary review.

Actions After Receiving Your Payoff Letter

Once the mortgage payoff letter arrives, carefully reviewing its contents is an important first step. Verify that the correct loan number, property address, and especially the good-through date are accurate. Confirm all listed amounts, including the principal, accrued interest, per diem interest, and any fees, align with expectations. If any discrepancies are found, contact the lender immediately to resolve them.

Make the payoff payment according to the precise instructions provided in the letter. This typically involves initiating a wire transfer for immediate settlement or sending a certified check to the specified address. In situations like a home sale or refinance, the title company or closing agent usually handles coordinating the payment directly from the transaction proceeds, ensuring the funds reach the lender by the good-through date.

After the loan is paid in full, ensure the mortgage lien is officially released from the property’s title. A mortgage lien is a legal claim placed on your property by the lender, which remains until the debt is satisfied. Once the payoff is complete, the lender is responsible for filing a “Satisfaction of Mortgage” or “Deed of Reconveyance” with the county recorder’s office where the property is located. This public record confirms that the loan has been paid and the lien removed, clearing the title.

Lenders generally process and file these lien release documents within a timeframe that can range from 30 to 90 days, though in some instances, it might take up to six months depending on local recording processes. Homeowners should verify that the lien has been officially released by checking public records online or by contacting the county clerk or recorder’s office. If the lien is not released in a timely manner, contact the lender’s lien release department. If issues persist, consulting with a real estate attorney might be a necessary step to ensure the clear title to your property.