What Is a Mortgage Payoff Letter?

Everything you need to know before you request a mortgage payoff letter: What is a mortgage payoff letter, what does it include, and how do you get one?

What Is a Mortgage Payoff Letter?

Everything you need to know before you request a mortgage payoff letter: What is a mortgage payoff letter, what does it include, and how do you get one?

Written by:

Tyler Adams

Read time:

5 minutes

Category:

Real Estate

No matter how long your mortgage was for when you first signed the bottom line, you have likely looked forward to the day when it’s all paid off for quite some time.

Whether you’ve come close to the finish line by consistently paying month after month, you’re in the process of selling your home, or you want to finish off the remaining balance as part of a strategy to become debt-free, there comes a time when you need to formalize the mortgage payoff milestone. No matter how you’ve reached this point, the process will begin with a mortgage payoff letter.

So what is a mortgage payoff letter, what does it include, and what else do you need to know about the mortgage payoff process? 

Here are all the key details you need to know.

What is a mortgage payoff letter?

A mortgage payoff letter can come in two forms.

One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan. This formal letter also includes other key information, such as where to send the money, what payoff forms are acceptable, and how long the payoff estimate is good for (given interest costs). Borrowers can then use this letter to pay off the remaining balance themselves or provide it to their title company as part of the closing process for their home sale.

The second type of mortgage payoff letter confirms that the borrower no longer has any obligation for payment. This letter can also signify the achievement of a clean title to the property in the name of the borrower.

What is the mortgage payoff letter life cycle?

Although the final result is a few pieces of paper, the process of requesting and receiving a mortgage payoff letter involves several moving parts.

More specifically, the process includes the borrower or, in the case of a closing, the title company: 

  • Requesting a payoff statement from the lender
  • Reviewing the outstanding balance and any remaining or related fees
  • Confirming any interest payments due through the payoff period identified
  • Verifying through an online banking portal, in person at a banking location, or with a verified customer service representative the account number or address to send the final payment to

Most borrowers are familiar with the mortgage payoff letter as part of the closing process for the sale of their home. In this case, the title company may request a mortgage payoff letter on behalf of the seller. The title company can also handle the disbursement of funds to the lender following the closing using a wire transfer delivered to the lender.

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What are some of the key elements of a mortgage payoff letter?

Mortgage payoff letters generally supply the following information:

  • The date when the generated mortgage payoff amount expires
  • The official name of the bank to which the payoff amount should be sent
  • The destination account number to which the payoff amount should be wired
  • Any related charges to include with the payment, such as fees for account closing or for paying off the loan before the projected payoff date

How can you protect yourself throughout the mortgage payoff process?

Reaching the end of your mortgage term or the closing date of your home sale is an exciting time. 

With all of the excitement and the pressure to complete the necessary paperwork, it’s important not to get swept up in the moment and either make a mistake or fall victim to mortgage payoff fraud. Fortunately, with the right tools, this form of fraud, in which the destination account for the balance of your mortgage is manipulated by a criminal to include their banking details, is preventable.

The best way is to make sure that the required account information and mortgage payoff details are collected and verified with a platform that provides end-to-end encryption so they cannot be intercepted and you can confidently move through the loan payoff process. 

Want to learn more about an industry-leading solution that can give you and your customers the peace of mind that comes with secure mortgage payoffs? Or do you want to learn more about mortgage payoff fraud and how you can stay safe? 

We recommend checking out CertifID’s complete guide, Mortgage Payoffs Under Siege, now.

Tyler Adams

Co-founder & CEO

Tyler brings a decade of leadership experience developing and launching technology businesses. Before co-founding CertifID, Tyler led new product development at BCG Digital Ventures for Mercedes-Benz, First American Financial, Boston Scientific, and Aflac.

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