What is a Mortgage Payoff Letter?
A payoff letter is a letter your lender sends with specific details about retiring your loan with them. The letter tells you exactly how much to pay by a specified date, and how you should make the payment. It should include wiring instructions as well as requirements for those who decide to pay by check.
Your payoff letter may also describe how much you should adjust the payment if you pay before or after the projected payoff date. This helps in case you want to pay a few days early or late.
How to Get a Payoff Letter
To get a payoff letter, ask your lender for one. You can generally call customer service, and you may be able to make the request online or via an automated phone system if customer service is not available.
If you’re refinancing, your new lender will most likely make the request for you and the old lender may simply notify you that a payoff quote was requested.
Costs
It may be free to get your payoff letter, or you may have to pay. Ask customer service if there’s a cheap way to do it. For example, some banks mail the document for free but charge $25 to fax it to you.
There may also be a fee to pay off the loan. If you pay off the loan yourself - either because you have enough money or you refinance in a peer to peer lending transaction - make sure you add the processing fee to the payoff quote so the transaction goes through.
Make sure you pay close attention to all the fees, including prepayment penalties.
Verbal Quotes
You can also get a verbal payoff number from your lender. This is not an official and legally binding document, but at least you get an idea of your payoff amount. You can plan ahead and even move forward with a verbal quote, but if anything goes wrong you have no recourse.
