What Is a Mortgage Payoff Statement?


Quick Answer

A mortgage payoff statement is a document that a lender issues to a borrower to notify him of the outstanding mortgage terms, notes Investopedia. It includes pending loan balance, interest rate, payments number and prepayment interest refund amount. A mortgage payoff statement is also known as a letter of demand.

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Full Answer

Lenders prepare mortgage payoff statements if a borrower requests to settle the mortgage loan earlier than expected, according to Investopedia. Typically, borrowers seek a mortgage payoff statement in writing, through e-mail, fax or the bank's online form if the bank offers the service online, states SFGate. When requesting the statement, the borrower needs to provide his personal details, such as name, contact information and the loan number. Additionally, the borrower should include the date when he intends to pay off the loan, and if needed, an explanation why he wants to settle the loan earlier.

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.

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