Lead Attorney John Aylesworth describes what goes into a mortgage payout when selling a mortgaged property. 

If you have a mortgage when you sell, it must be paid off and the lender's lien must be released as part of the closing process. The mortgage payoff is just one of the numbers that calculate your final closing statement, but it’s probably the most important, if not the largest one.     

As part of our closing services for sellers, we request a payoff demand letter from your lender to see how much you still owe on your loan. That outstanding loan balance is then subtracted from your gross proceeds along with other costs and expenses. So we can estimate how much money you’ll take home after a successful closing.  
The lender's payoff statement typically includes: 

• The balance of the principal loan, which is calculated to the day the loan will be paid off 
• All accrued mortgage interest through the date the lender will receive the funds 
• Reimbursement for any advanced costs such as legal fees for a foreclosure 
• Deficits in the escrow account which can include tax and insurance payments the lender made if you did not have enough money in escrow to cover the bills 
• Late payment fees if applicable 
• Administrative fees, such as the cost of recording a Release of Mortgage or the delivery of the demand statement.  (Yes, lenders still send faxes and charge fees to do so.) 
• Plus any additional fees, which vary by lender 

The payoff amount is then deducted from the proceeds of the sale at your closing. Typically, you will have a choice on how to receive the proceeds, via paper check or wire transfer.  

If you’d like to learn more about buying and selling real estate in the Chicago area, schedule a call with John or Mike by hitting the button below.  

We’re here to help you close with confidence.