What is the purpose of a loan payoff letter?


Quick Answer

The purpose of a loan payoff letter is to bring the borrower up to date on the amount owed to the lender and the date of payment, notes Nolo. A borrower requests this letter from the lender when planning to pay off a loan to avoid foreclosure.

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Full Answer

The letter highlights the outstanding principal balance and interest, in addition to any costs and fees, explains Nolo. A loan payoff letter also provides the borrower with instructions on how to pay by check or wire transfer. It also describes how to schedule payments if the borrower plans to pay before or after the due date.

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