Ever wonder why the dollar amount on your monthly mortgage loan statement doesn’t match the payoff amount your lender gives you? It’s a common surprise for homeowners preparing to pay off their mortgage before closing. Brenden, our closing administrator, tells you in this quick video.

A question we hear frequently from sellers is: “Why is my mortgage payoff higher than the balance on my loan statement?” This is generally the norm. And here are three reasons why.

First, your loan statement shows the principal balance as of the statement date. But you might owe interest up until the day the loan is actually paid off.

And since the payoff is typically sent the day after closing, you may need to cover that extra interest.

Second, mortgage payments are made “in arrears.” That means the payment you made on July 1st, actually paid the interest for June. So at closing, the payoff may include the interest that built up since your previous payment.

And third, lenders often tack on administrative fees for things like payoff processing, county recording, and escrow shortages.

Any fees should be itemized in your payoff statement.

 

You have every right to ask your lender—or your attorney—for a breakdown.

 

Bottom line: the payoff amount reflects the actual cost of paying the principal balance, unpaid interested, and any administrative fees to close out the loan.

 

If you’re selling and want a clear view of how much you’ll walk away with, feel free to schedule a call with Brendan, Mike or John. We can talk you through it.

 

We’re here to help you close with confidence.