A mortgage payoff statement is a paper given to a homeowner that has the remaining balance of the mortgage on it. These papers are also called letters of demand.
The mortgage payoff statement includes not only the amount remaining of the mortgage balance that needs to be paid off, but also the rate of interest and the amount of payments left at the current amount. Generally, these payoff statements are prepared for a homeowner when he is considering paying off his mortgage early. This causes an issue, however, as there can be pre-payment penalties; the bank would be losing money off of uncollected interest from the payments made early, so they have the penalty fee to recoup.
A mortgage payoff amount is calculated by the per diem amount, which is one item located on the mortgage payoff statement. If the homeowner closes after the good through date, the lending company would charge a per diem rate for every day afterward. Every payoff statement will have five main things: the per diem amount for interest; the principal balance; interest calculated through the payoff good date; the payoff statement fee, which is usually around $30, depending on the lender; and the total payoff amount.
Depending on the state, the borrower may be required to pay a fee to get the statement, notes SFGate. In California, for instance, lenders are allowed to charge $30 for the statement, as of 2015. Borrowers in Georgia, however, are entitled to a free payoff statement. Additionally, the borrower may be required to pay a $50 payoff fee if his loan is not FHA-financed or is not backed by the U.S. Department of Veterans Affairs.