Paying off your mortgage loan is an exciting milestone. Whether you’re looking to be debt-free or want to refinance your home, you’ll need to request an official payoff letter from your mortgage lender. This letter provides the exact payoff amount needed to satisfy your loan.
Using a mortgage loan payoff letter template can make this process faster and easier. In this comprehensive guide, we’ll explain what a mortgage payoff letter is, when you need one, what to include, and how to write your own payoff letter template.
What is a Mortgage Payoff Letter?
A mortgage payoff letter, also called a payoff statement, is a formal document issued by your mortgage lender that shows the total outstanding balance on your home loan. This includes the remaining principal, any accrued interest, and fees owed to fully pay off the loan.
You’ll need a payoff letter when you
- Refinance or pay off your mortgage early
- Sell your home and need to provide the payoff amount to the closing agent
- Pay off your mortgage at the end of the loan term
The lender is required to provide this payoff statement within 7 days of your request. It provides an official payoff quote valid for a specific date range, often 30 days. This allows you to pay off the loan within that timeframe without incurring additional interest or fees.
When Do You Need a Mortgage Payoff Letter?
There are several situations when you’ll need to request a formal payoff letter from your mortgage company:
Refinancing Your Mortgage
When you refinance your home loan, the new lender will require a payoff statement from your existing mortgage company. This allows them to pay off the old loan in full and put the new loan in place.
Paying Off Your Mortgage Early
If you want to pay off your mortgage ahead of schedule you must obtain the payoff amount first. This ensures you pay the full balance owed so the lender releases the lien on your home.
Selling Your Home
During the closing process, the title company will need the official mortgage payoff amount to finalize the sale. The payoff letter ensures the correct amount gets paid as part of closing.
End of Loan Term
At the end of your mortgage term, whether 15 or 30 years, your lender will send a payoff statement indicating the remaining principal and interest owed on the loan. This allows you to satisfy the mortgage in full.
How to Get a Mortgage Payoff Letter
Contact your mortgage lender or loan servicer directly to request a payoff letter. Here are some ways to do it:
- Call your lender’s customer service line and ask for a payoff statement.
- Login to your lender’s website and download the payoff letter from your account.
- Email or mail your request to your lender’s mortgage customer service department.
- Fill out your lender’s official payoff statement request form, if available.
Provide your name, loan account number, property address, and the date you need the payoff amount effective. In most cases, you will receive your mortgage payoff letter within a week. Check for any fees your lender charges for providing the payoff statement.
What to Include in a Mortgage Payoff Letter Template
If you’re looking to create a mortgage payoff letter template, be sure to include these key details:
Lender Information
- Lender name, address, phone, website
- Loan officer or account representative’s contact info
Borrower Information
- Borrowers’ names
- Property address
- Mortgage loan account number
Payoff Details
- Current loan balance
- Accrued interest
- Late fees or charges
- Escrow account balance
- Per diem interest amount
- Payoff amount expiration date
- Instructions for sending payoff funds
Disclaimers
- Statement that loan is paid in full upon paying amount owed
- Instructions if payoff funds are insufficient
- Contact information for questions
Letter Date and Signature
- Date letter was issued
- Loan officer’s signature
Let’s look at each of these mortgage payoff letter template sections in more detail:
Lender Information
The first section should provide the full contact details for the lender or loan servicer issuing the payoff statement. This includes:
- Company name
- Address
- Phone and fax numbers
- Email address and website URL
- Loan officer or account representative’s name, title, phone and email
This information allows the borrower to contact the lender with any questions or follow up items about the payoff letter.
Borrower Information
Next, include the borrower’s details:
- Full names of all borrowers on the mortgage loan
- Property address subject to the mortgage
- Loan account number
This specifies the exact loan and property the payoff statement applies to.
Payoff Details
This section provides the actual payoff amount figures, including:
-
Current loan balance: The outstanding principal balance owed.
-
Accrued interest: The total interest accrued and unpaid since the last mortgage statement. This is often detailed per day.
-
Late fees/charges: Any outstanding late fees, insufficient fund fees, or other charges owed.
-
Escrow balance: The amount held in escrow for taxes and insurance. This may be refunded to the borrower after payoff.
-
Per diem interest: The daily interest amount that accrues on the unpaid balance.
-
Payoff expiration date: The date through which the payoff amount is valid.
-
Instructions: Where/how to send the payoff funds to the lender along with account and routing numbers.
The payoff letter should clearly state the total amount due to satisfy the mortgage and the date by which funds must be remitted to avoid additional interest or fees.
Disclaimers
Typical disclaimers or notices in a payoff statement include:
-
A statement that remitting the payoff amount will fully satisfy the mortgage loan.
-
Instructions if the payoff funds are insufficient to pay the balance owed. Additional interest or fees may be charged in this case.
-
Contact information for any questions about the payoff letter and payoff process.
Letter Date and Signature
The payoff letter template should be dated and signed by a loan officer or mortgage representative. This may be an electronic signature in some cases.
How to Write a Mortgage Payoff Letter
When creating a mortgage payoff letter, follow these steps:
-
Gather information: To generate the payoff figures, pull the loan details, outstanding balances, interest charges, and escrow balance. Calculate the per diem interest.
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Compose letter: Write the payoff letter based on the standard template, filling in all borrower, loan, and payoff details.
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Add disclosures: Include any necessary disclaimers, expiration dates, or instructions about the payoff amount.
-
Review carefully: Double check all interest calculations and payoff figures for accuracy. Have someone else review before sending.
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Issue letter: Print the payoff letter on official lender letterhead. Sign, date, and send to the borrower.
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Save copy: Retain a copy of the payoff letter along with the payoff calculations for loan records.
Be sure to generate the payoff letter figures within 1-2 business days of issuing so the amounts are as current as possible. This prevents any fee or interest changes.
Here is an example mortgage payoff letter template:
[Lender Letterhead]
[Date Letter Issued]
Borrower Names: [John and Jane Doe]
Property Address: [123 Main St, Anytown, US 12345]
Loan Number: [1234567890]
Dear [Borrower],
Per your request, please find enclosed the payoff statement for the above referenced mortgage loan.
Current Principal Balance: [$100,000]
Accrued Interest: [$2,000]
Late Charges: [$0]
Escrow Balance: [$1,500]
Per Diem Interest: [$20]
TOTAL PAYOFF AMOUNT DUE: [$103,500]
To satisfy this loan in full, the Total Payoff Amount Due must be remitted to [Lender Name] by the Payoff Expiration Date of [XX/XX/XXXX].
Please make the payoff funds payable to [Lender Name] in the form of a certified bank check, money order, or wire transfer. Include the loan number on the payment. Send funds to:
Lender Address
Account #12345679
Routing #987654321
Insufficient payoff funds may result in additional interest or fees due. Please contact us immediately at [phone number] or [email] with any questions or issues regarding this payoff letter.
Sincerely,
[Loan Officer Name and Title]
[LO’s signature]
Mortgage Payoff Letter Template FAQs
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