How to read a mortgage payoff statement

Why the payoff amount is not your balance

Your monthly statement shows the principal balance on a particular date. The payoff amount also includes interest owed through the day the loan is paid off, and it can include unpaid fees, charges, and any applicable prepayment penalty. That is why a payoff figure is always tied to a date.

Find the good-through date and daily interest

The statement should show the date through which the quoted amount is good. Many statements also show a daily, or per diem, interest amount, which helps show how the total changes if funds arrive later. If your closing or payment is delayed, ask for an updated statement rather than estimating from the old one.

• Confirm the good-through date matches your planned payoff date.
• Note the per diem interest and how late-arriving funds are handled.
• Check the accepted payment methods and where to send funds.

Read the fees and escrow lines

Review each fee and ask the servicer to explain any you don’t recognize. Check how the statement treats your escrow balance: it is often not subtracted from the payoff amount, and money left in escrow is generally returned to you after the loan is paid in full. A monthly payment made after the statement was issued may not be reflected, so ask how it will be applied. An unfamiliar charge is a reason to ask, not proof of an error.

How quickly you should receive it

For a loan secured by your home, the servicer generally must send an accurate payoff statement within a reasonable time, and no more than seven business days after receiving a written request. Limited exceptions allow more time, such as when the loan is in bankruptcy or foreclosure, is a reverse mortgage, or is affected by a natural disaster. A closing agent acting for you can also make the request. Make the request in writing and keep a copy.

After the payoff

Keep the payoff statement, proof of payment, and the servicer’s confirmation that the loan is paid in full. Watch for any escrow refund and for the release of the lien, whose process and timing depend on state law. In Lighthouse, document analysis can read a payoff statement and keep its figures with your Home Profile. Verify extracted amounts against the original statement before sending funds.