Why payoff statements matter

When you close or refinance a loan, the payoff statement is the single-source number the old lender uses to release the lien and the new lender uses to fund the payoff. If that number is wrong or arrives too late, closings stall, wire transfers fail, or you may be surprised by last-minute charges. In my practice working with homeowners and small-business borrowers, nearly every delayed closing I’ve seen traced back to an out-of-date payoff or an overlooked escrow shortage.

What a payoff statement includes

  • Remaining principal balance. The core unpaid loan amount.
  • Accrued interest. Interest that has accumulated up to the payoff date; often prorated daily.
  • Fees and charges. Examples: late fees, processing fees, reconveyance or release fees, and any prepayment penalty the contract allows.
  • Escrow shortages. Mortgage payoffs can include escrow deficits for taxes or insurance due.
  • Expiration date and per‑day interest. Most statements show a “good-through” date and a per‑day interest amount if the payoff occurs after that date.

(Consumer Financial Protection Bureau explains how lender payoff quotes work and why timing matters: https://www.consumerfinance.gov/ask-cfpb/what-is-a-payoff-statement-en-1076/.)

How to request and use a payoff statement

  1. Request early. Ask the servicer for a payoff statement as soon as your refinance or closing is scheduled. Many lenders can produce a good-through date 7–30 days out; if your closing slips, get an updated statement.
  2. Ask for a written, itemized statement. Confirm principal, interest through a specific date, fees, and per‑diem interest after that date.
  3. Confirm payment method and wiring instructions. Use the exact wiring information on the statement — fraud is common when wires go to the wrong account.
  4. Reconcile differences. If numbers don’t match your payoff math (for example, you already made a recent payment), ask for an explanation in writing.

Timing and validity

Payoff statements are time‑sensitive. Typical validity windows are 7–30 days depending on the servicer and loan type. If the payoff isn’t made by the expiration date, the lender will issue an adjusted payoff reflecting additional per‑diem interest or late fees. New lenders often obtain a fresh payoff themselves as part of closing, so coordinate both sides to avoid duplicate wiring or missed amounts.

Common fees and surprises to watch for

  • Per‑diem interest: small daily amounts that add up if closing delays occur.
  • Escrow shortages: unpaid taxes or insurance advances the servicer expects at payoff.
  • Reconveyance or release fees: state or servicer charges to clear the lien.
  • Prepayment penalties: less common but still present in some older or commercial loans.

Real‑world example

Suppose your servicer lists: principal $150,000; accrued interest through 6/15 $1,000; escrow shortage $500; processing fee $250. The payoff statement total = $151,750, with a per‑day interest of $25 after 6/15. If your closing moves to 6/18, expect an added $75 in per‑day interest unless you obtain and pay an updated payoff.

Special considerations for refinancing

The new lender typically coordinates payoff at closing, but you remain responsible for confirming the payoff amount and receiving proof the prior loan was satisfied. If you’re doing a cash‑out refinance, double‑check lien priority and whether subordinate liens require payoffs or subordination agreements.

Practical tips to avoid problems

  • Request the payoff statement at least 2 weeks before closing and again 48–72 hours before funding.
  • Confirm wiring instructions in person or via the lender’s secure portal; call a verified number (not one in an email) before wiring.
  • Compare the payoff statement to your loan statements; flag any unexpected late fees or escrow charges immediately.
  • Keep written proof of payoff (a satisfaction or reconveyance) and check county records that the lien was released.

Related resources on FinHelp

Final notes and disclaimer

A payoff statement is a legal accounting from your servicer; treat it as binding until you receive written confirmation of payoff and lien release. This content is educational and not personalized financial advice. For case‑specific guidance, consult your loan servicer or a licensed attorney or financial advisor.