Are you selling a home in the Tampa Bay area that has a mortgage on it? You may end up hearing the terms “Payoff” or “Payoff Letter” in the sales process of your property.
This letter, issued by the lender, states a precise payoff amount that is valid up to a certain date. As long as your payment is received by the date specified in the letter, your loan will be fully paid off.
Your Mortgage Balance Is Not Your Pay-Off Amount
The balance on your mortgage statement is rarely the amount you need to remit in order to pay off the mortgage in full. Accrued interest, deferred payments, and/or early payment fees need to be calculated by the lender in order to determine the payment that truly fulfills your loan obligation.
During the sale of a home a payoff letter is typically requested by the title company servicing your closing. It will specify the amount that needs to be paid in order to satisfy the seller’s loan. The transfer of ownership typically requires satisfaction of the seller’s loan payoff in order to be insured and finalized.
Timing is always delicate in a real estate transaction. Release of funds, clear title, and myriad documents need to be ready on time in order for a real estate closing to take place. Any delays in the closing date that go past the date on the payoff letter can make the payoff amount invalid necessitating a new letter and matching funds.
Other Uses for a Payoff Letter
You also need the information in a payoff letter before you refinance a mortgage or if you choose to pay off the mortgage early. The letter will have the amount to pay and will often include special payment instructions on who to contact since a full pay off maybe processed by a different department than the one handling monthly payments.
Whether you are selling, refinancing, or pre-paying a mortgage. Remember to contact your lender for a payoff letter. This document ensures that you will make a full payment for the proper amount and in the proper manner.
At Flagship Title we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 813.875.1200.
In case you missed it, check out our last Flagship Title post: How Do I Choose The Right Lender For Me?