A loan payoff statement is the precise “final bill” from your lender showing the total amount required to pay off your loan completely as of a specific date. Unlike regular monthly statements that reflect balances as of a past date, this statement includes all accrued interest and fees through the requested payoff date, helping prevent overpayment or underpayment.
Why You Need a Loan Payoff Statement
Because interest on most loans—including mortgages, auto loans, and personal loans—accrues daily, the balance shown on your latest statement or online account is usually outdated. To close your loan accurately, you need a payoff statement that calculates the exact payoff amount for the date you intend to pay.
Situations where a payoff statement is essential:
- Home sales: The title company or escrow agent uses the payoff statement to determine how much to pay your mortgage lender at closing.
- Refinancing: Your new lender will request a payoff statement from your current lender to pay off the existing loan.
- Early loan payoff: Ensuring you pay the exact amount to close your loan without leftover balance.
- Estate or legal settlements: Executors or attorneys need payoff statements to settle loans properly.
How to Obtain a Payoff Statement
Request your payoff statement by contacting your lender via phone, online portal, or written request. Provide:
- Your loan account details
- The exact payoff date you plan to make the final payment
The lender will send you the payoff statement, typically free, via email, mail, or fax. Some lenders may charge a small fee for expedited delivery.
Key Information Included in a Loan Payoff Statement
- Loan account number
- Payoff date and validity period (usually 10-30 days)
- Remaining principal balance
- Accrued interest through payoff date
- Any outstanding fees or penalties
- Total payoff amount required
- Per diem interest rate (interest accrued per day after payoff date)
- Payment instructions for submitting the payoff amount
Distribution of the Loan Payoff Statement
The payoff statement is provided to parties who need it to facilitate loan closure:
- The borrower
- Title companies or escrow agents involved in real estate transactions
- New lenders in refinancing scenarios
- Attorneys or estate executors handling settlements
Common Pitfalls to Avoid
- Paying only the amount on your last monthly statement instead of obtaining a payoff statement
- Ignoring the payoff date validity, resulting in underpayment or additional interest
- Not following up to confirm your loan account is fully closed and lien releases are processed
Properly obtaining and using a loan payoff statement ensures your loan is fully satisfied without leftover balances or credit reporting issues. For more on related financial documents, see our guide on Payoff Demand Statement and Online Loan Servicing Portals.
Additional Resources:
- Consumer Financial Protection Bureau on mortgages: https://www.consumerfinance.gov/consumer-tools/mortgages/
- Investopedia guide to loan payoff statements: https://www.investopedia.com/terms/l/loan-payoff-statement.asp