What Is a Payoff Quote and When Do You Need One?
Discover the exact amount needed to fully close a loan. Learn what a payoff quote is and its importance for financial clarity.
A payoff quote is a document from a lender that specifies the precise amount required to fully satisfy a loan on a particular date. This amount differs from the current balance on a monthly statement, accounting for all charges, including daily accrued interest, up to a future payoff date. It ensures a loan is completely paid off, preventing any outstanding balances or accidental overpayments.
What a Payoff Quote Contains
A payoff quote provides a detailed breakdown of the total funds needed to close out a loan. It includes the outstanding principal balance and accrued interest, calculated from the last payment date up to the specified “good-through” date. This good-through date is important, as the quoted amount is valid only until this specific day, often ranging from 10 to 30 days from the request date.
Beyond principal and accrued interest, a payoff quote may itemize various fees. These can include late fees if payments have been missed, or administrative charges for preparing the quote, which typically range from $10 to $50. Some loans might also include a prepayment penalty if the loan is being paid off early, though these are less common for residential mortgage loans originated after January 2014. The quote also specifies “per diem” interest, which is the daily interest amount that continues to accrue until the loan is fully paid.
When You Need a Payoff Quote
Borrowers need a payoff quote in several important financial situations. When selling a property, the mortgage must be satisfied to transfer a clean title. Refinancing an existing loan also requires a payoff quote to determine the amount the new lender must disburse. Paying off a loan early, such as an auto, personal, or mortgage loan, necessitates a quote to ensure the exact amount is paid, avoiding remaining debt or overpayment.
A precise quote is also important for debt consolidation efforts, allowing a new consolidation loan to cover the exact amounts owed. In debt collection situations, a lender may issue a payoff statement to inform the borrower of the amount needed to stop further actions.
How to Get a Payoff Quote
Obtaining a payoff quote involves contacting your loan servicer, the entity that handles your loan payments. Most lenders offer multiple methods for requesting a quote, including calling customer service, accessing an online portal, or submitting a written request via mail or fax. When requesting, provide your loan account number, full name, and for real estate loans, the property address. You must also specify the exact payoff date, as this affects the calculated amount due to daily interest accrual.
Lenders deliver payoff quotes through various channels, such as email, regular mail, or online portal downloads. While some lenders may provide a verbal estimate, these are not legally binding; a formal written quote should be requested for accuracy. For loans secured by a dwelling, servicers are required to provide an accurate payoff statement upon request.