Closing attorney John Aylesworth talks about the seller's timing when paying the final mortgage payment before the closing.

When you're selling your house or condo, the timing of your last mortgage payment is all about the timing of your closing.  

Your last payment depends on your closing date and the terms of your mortgage, which should be on your mortgage statement.

Most mortgage payments are due on the first day of the month but allow a 15-day grace period in which you can pay without a late fee. 

So if you have a 15-day grace period AND your mortgage payment is due on the first of the month, it works like this:

• If the closing date is after the 15th, we recommend you make that month’s payment.  
• If the closing date is between the 10th and the 15th, it’s probably ok if you skip it. If you do pay it, then pay no later than the 3rd.
• And if the closing date is between the 1st and the 10th, you can skip it. Your loan should be paid off before the payment is due.  

To know for sure, check with your lender. If you have additional loans, check on them too. Some loans, like second mortgages and equity lines of credit, may have different due dates and grace periods. 

• Here are a few more things to keep in mind:  
• If you pay your loan via autopay, cancel it early enough so the lender does not take funds erroneously.  
• If you are going to make a last payment, make sure you pay it early enough for the funds to clear at the lender's end and so they are credited against the balance due.   
• If you are closing on the 5th, do not leave it until the 3rd to send it in. We recommend making payment no later than 7 days before closing.   
• What happens if you overpay? Don't sweat it. Your lender is obligated to promptly return all overpayments.   
• If you do overpay, the lender should return all excess funds within 30 days of the loan repayment. So, you will be covered even if they collect one extra payment.  

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

We’re here to help you close with confidence.