Mortgages: they’re a crucial part of the home buying process. But what homeowner doesn’t look forward to the day their mortgage disappears along with the required monthly payment?
Early payoff may seem far-reaching, but maybe you have multiple debts weighing you down and you want to consolidate them into one payment for better management.
No matter which financial goal you have, you first need a clear picture of your remaining loan amount and associated charges. That’s where a mortgage payoff statement comes in. It lays out each fee and dollar still due before you completely pay off your mortgage. Here’s how it works.
A payoff statement for a mortgage, sometimes referred to as a payoff letter, is a document that details the exact amount of money needed to fully pay off your mortgage loan. The payoff amount isn’t just your outstanding balance; it also encompasses any interest you owe and potential fees your lender might charge.
The payoff statement is a vital document due to the interest on your loan balance, which is added daily. The exact amount due changes based on the terms of your loan, meaning that you can’t just guess the overall amount owed. If you try, you’ll likely fail to pay everything you actually owe, leading to frustration, wait times and complicated communication.
Mortgages aren’t the only type of loan that use payoff statements, either. You can request one when you borrow for other purposes as well. This statement is necessary paperwork if you want to change or consolidate your debt, too. You may not be the only one utilizing a payoff statement. Occasionally, a creditor may present you with this document if they took a serious collection action on your loan – usually on liens.
For the most part, a servicer is required to send back a payoff statement within 7 business days of the initial request.