Mortgage payoff statement: Everything you need to know

When you own a home, each mortgage payment chips away at the principal you borrowed. If you're ready to refinance your mortgage or are prepared to pay off the loan in full, you'll want to request a mortgage payoff statement. This document from your lender tells you how much you need to pay to finish off your loan, including the remaining mortgage balance, interest, and fees. Here's a closer look at what a mortgage payoff statement is and why you might need one.

What is a mortgage payoff statement?

A mortgage payoff statement – sometimes called a payoff letter – is a document from a lender that includes a payoff quote. What is a payoff quote? It's the exact amount of money needed to fully pay off your mortgage as of a specific date. The payoff amount includes more than your outstanding principal balance. It also includes any interest and fees you’ll owe according to the terms of your loan.

If you are looking to pay off your mortgage early, you can request a mortgage payoff statement to find out exactly how much you need. Paying off your mortgage early can save you a significant amount of interest. However, keep in mind that some lenders charge prepayment penalties for early payoff to compensate for the lost interest.

Mortgage payoff statement vs. current loan balance

The amount listed on your mortgage payoff statement is how much you need to pay to satisfy the terms of the loan. This amount differs from the current loan balance you see on your monthly mortgage statement or on the lender's online portal.

Because interest is added to your balance each day, your current balance might not include any days of interest that haven't been charged yet. The amount on your mortgage payoff statement includes any accrued interest through the day you plan to pay off the loan. It also will include any fees or prepayment penalties that would not be factored into your current balance.

When do you need a mortgage payoff statement?

Here are some situations when you might need a mortgage payoff statement:

• Refinancing. When you refinance, you pay off your current mortgage with money from a new mortgage. You may decide to refinance to reduce your interest rate, change your loan type or term, or access your equity. A payoff statement will tell you exactly how much your new mortgage will need to be.
• Paying off your mortgage early. If your financial situation has changed and you find yourself in the position to pay off your mortgage early, you could save a lot of money on interest. A mortgage payoff statement will tell you exactly how much you’ll owe.
• Debt relief. If you’re looking to consolidate debt or are working with a debt relief company, they will need to know how much debt you have overall. You may be asked to provide a mortgage payoff statement.
• Collections. If you’ve fallen behind on your mortgage payments or you have debt that was sent to collections, you may receive a mortgage payoff letter that tells you how much you owe to stop collections.

If you're paying off your loan early, you also should inquire about your escrow

 balance. Many homeowners pay into an escrow account monthly to cover homeowners insurance premiums and property taxes. Some homeowners can receive a portion of the balance back after paying off their mortgage.

What’s included in a mortgage payoff statement?

Here’s what you can expect to see included in your mortgage payoff statement:

• Payoff amount. The amount of money you'd need to pay to satisfy the loan on a specific date.
• Principal balance. The remaining amount of the money you borrowed that you need to repay.
• Expiration date. The date through which the payoff amount is good.
• Accrued interest. The amount of interest you'll owe until the expiration date.
• Fees or charges. Any additional fees or prepayment penalties charged by your lender.
• Payment instructions. Information on who to address the payment to and where to send it.

How to request a payoff quote

To get a mortgage payoff statement, you can request one from your mortgage servicer. Your mortgage servicer is the company you make your monthly payments to and may be different from your initial lender. You can find the name and contact information for your servicer on your monthly mortgage statement.

You'll typically be able to request your payoff quote from your servicer's online portal, by phone, or via a written request form. You can expect to be asked for the following information:

• Full name
• Loan number
• Property address
• Phone number
• The date you want your payment to be made

The amount of time it takes to receive your mortgage payoff statement will vary depending on the lender, but you can usually expect it within 7 business days. Some lenders may charge a small fee, but many lenders will provide a mortgage payoff statement free of charge.

What happens after you pay off your mortgage?

Paying off your mortgage is a major accomplishment that's often been years in the making. Once your home loan is repaid, you'll no longer be responsible for that big monthly payment, which can be a significant financial weight off your shoulders. Here's what happens next:

• Confirmation letter. The lender will send a satisfaction of mortgage confirmation letter confirming that the loan has been paid in full.
• Lien release. Your satisfaction of mortgage letter will also confirm that the lien on the property has been released and the title belongs solely to the homeowner.
• Escrow refund. You may receive a refund from your escrow account for any overpayment of property taxes or insurance.

FAQ

Here are answers to some frequently asked questions about mortgage payoff statements.

Is a payoff quote less than the balance?

The payoff quote is typically higher than your current mortgage balance because it includes fees and accrued interest through the payoff date.

Can a payoff quote be negotiated?

Your payoff quote usually can't be negotiated because it is based on the principal balance, interest rate, and loan terms.

How do you prove your mortgage is paid off?

You'll receive a confirmation letter from your lender – often called a satisfaction of mortgage – which serves as proof that your mortgage has been paid off in full. Be sure to keep this letter and any documentation of your final payment.

The bottom line on mortgage payoff statements

Mortgage payoff statements are an important document for both homeowners and their mortgage lenders. This document details the amount still owed on the loan and any remaining charges up to a specific date. A mortgage payoff statement can be helpful if you're looking to refinance, pay off your loan in full early, or find debt relief. While these statements require some paperwork, they're relatively easy to obtain.

If you’re looking to refinance your mortgage, start an application with Rocket Mortgage today.

Refinancing may increase finance charges over the life of the loan

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