What Is a Payoff Quote on a Mortgage?

A mortgage payoff quote provides a precise statement of the exact amount necessary to fully satisfy a mortgage loan on a specific date. This crucial document differs significantly from the outstanding principal balance typically shown on a monthly mortgage statement, as it accounts for all accrued interest and any applicable fees up to a future specified date. Homeowners rely on this quote for various financial transactions, ensuring they know the exact sum required to clear their mortgage debt entirely. The quote remains valid for a limited period, and payment must be received by the lender within this timeframe to avoid recalculation.

Key Components of a Payoff Quote

The principal balance represents the remaining amount of the original loan. This figure is distinct from the current balance on a monthly statement, as it includes all charges through a specific future date.

Accrued interest encompasses all interest that has accumulated since the borrower’s last payment up to the quote’s effective date. Lenders also factor in “per diem interest,” the daily interest charge, which adjusts the payoff amount if payment occurs on a day different from the quote’s original effective date. This daily accrual means the total payoff amount can change slightly each day.

Various fees may also be included in a payoff quote, such as statement fees, fax fees, or discharge fees. Some loans might include a prepayment penalty, designed to compensate the lender for interest they would have earned. Any such penalties are itemized within the quote.

A mortgage payoff quote also addresses any existing escrow balance held by the lender for property taxes and insurance. These funds may be credited towards the payoff amount, reducing the total sum due, or refunded separately to the borrower after the loan is satisfied. Understanding how escrow funds are handled is important for a complete financial picture.

An important part of the payoff quote is the “good-through date” or expiration date. This date specifies the last day the quoted amount is valid. Payment must be received by the lender on or before this date to fully satisfy the loan. If payment is made after this date, the amount due will likely change due to additional accrued interest, necessitating a new payoff quote.

How to Request a Payoff Quote

Obtaining a mortgage payoff quote requires initiating a formal request with your mortgage servicer. Borrowers need to provide identifying information, such as their full name, property address, and loan account number. Specifying the desired payoff date is important, as this date dictates the calculation of accrued interest and the quote’s validity period.

Mortgage servicers offer several methods for requesting a payoff quote. Many lenders provide secure online portals or mobile applications. Borrowers can also request a quote by phone, speaking with a customer service representative. Some servicers still accommodate written requests via mail or fax, though these methods may have longer processing times.

The processing time for receiving a payoff quote can vary, but servicers are generally required to provide the statement within seven business days. It is advisable to request the quote well in advance of the anticipated payoff date to allow for processing and review. While some lenders may charge a modest fee, many provide this service free of charge.

If a third party, such as a title company or real estate attorney, needs to obtain the payoff quote, the borrower must provide explicit authorization. This ensures the lender complies with privacy regulations while providing the necessary financial details. Requesting a payoff quote itself does not obligate the borrower to pay off the loan; it is solely an informational request.

Completing Your Mortgage Payoff

Once a borrower has received their mortgage payoff quote, careful attention to the payment submission process is essential. Lenders typically accept funds through specific methods, such as wire transfers, certified checks, or cashier’s checks. It is important to send the exact amount specified on the quote, ensuring it arrives by the “good-through date” to avoid any discrepancies or additional charges.

After the payment is received and processed by the lender, the post-payoff process begins. The lender is responsible for preparing and recording a document, often called a Deed of Reconveyance or Satisfaction of Mortgage, which officially removes the lien from the property’s title. This recording process can take some time, typically ranging from 30 to 90 days depending on local regulations and lender procedures.

The borrower will also receive a final statement from the lender confirming the zero balance and that the loan has been paid in full. It is advisable to keep all related documents, including the canceled promissory note and the recorded lien release, in a secure location. This documentation serves as proof that the mortgage has been fully satisfied.

The paid-off mortgage will be reflected on the borrower’s credit reports, showing the account as closed and paid in full. If an escrow account was maintained for property taxes and insurance, any remaining funds should be refunded to the borrower within a few weeks of the payoff. Property taxes and homeowners insurance premiums, previously managed through escrow, will now become their direct responsibility.