What a loan payoff letter includes

A payoff letter (sometimes called a payoff statement or payoff demand for mortgages) typically shows:

  • The loan account number and borrower name(s).
  • The payoff date and a “good‑through” or expiration date.
  • The exact payoff total broken into principal, per‑diem interest (daily accrual), unpaid fees, escrow/impound shortages, and any prepayment penalty.
  • Accepted payment methods (wire instructions, certified funds, etc.).
  • Instructions for lien release or payoff confirmation after payment.

Lenders calculate payoff amounts to the day, so the total can change if the payment isn’t made by the stated good‑through date (Consumer Financial Protection Bureau, consumerfinance.gov).

Why it matters

Using a payoff letter prevents mistakes that leave a small unpaid balance or result in overpayment. It’s required for many closings and refinances and is the document title companies and servicers expect at settlement. If you don’t use an up‑to‑date payoff letter, you risk extra interest, late fees, or delay in lien release.

See our guide on how payoff statements affect closings and refinances for more detail: How Payoff Statements Work When Closing or Refinancing a Loan.

How to request a loan payoff letter — step by step

  1. Gather information: account number, borrower name exactly as on the loan, property address (if applicable), and the intended payoff date. Some lenders also want the last 4 of your SSN.
  2. Contact the loan servicer: use the lender’s customer portal, secure message, email, or phone. Ask specifically for a “payoff statement” or “payoff demand” for the exact payoff date.
  3. Request delivery method and timeline: ask them to send an official letter on company letterhead, and request an emailed PDF plus a mailed original if required by the closing agent.
  4. Confirm the good‑through date and per‑diem interest amount so you can calculate if payment will arrive on time.
  5. Verify payment instructions: wire routing, account number, required beneficiary name, and whether certified funds are acceptable.
  6. Ask about fees: some servicers charge a fee for issuing a payoff statement—confirm the amount and how it’s billed.
  7. Obtain confirmation after payment: request a paid‑in‑full letter and a lien release (or recorded reconveyance) and verify the account is reported as closed to credit bureaus.

If the loan is a mortgage, you may receive a more formal “payoff demand.” For details on reading those documents, see: Reading a Payoff Demand: Everything a Borrower Needs to Know.

Timing and common windows

  • Typical turnaround: many servicers provide payoff letters within 24–72 hours; mortgages or manual requests may take longer. Ask the servicer for an estimated delivery time.
  • Good‑through dates are often narrow (one to five business days). If you expect delays in funding or wiring, ask for a later payoff date or a reissued statement.
  • After payoff, lien release timing varies by state and lien type — often 7–60 days for servicers to record satisfaction; check local recording requirements.

Accepted payment methods and safety tips

  • Wire transfers and certified/cashier’s checks are the most common. Personal checks often aren’t accepted for same‑day payoff.
  • Confirm wire instructions by calling the lender using a verified phone number — don’t rely only on emailed wiring instructions to avoid fraud.
  • Keep receipts, the paid‑in‑full letter, and proof of delivery. Check your credit report a few weeks later to ensure the account shows paid and closed.

Professional tips (from practice)

  • Request the payoff statement at least 5–7 business days before a planned payoff or closing to allow time for corrections.
  • Ask for the per‑diem interest rate and calculate the expected final total for your intended payment date.
  • Get written confirmation that any prepayment penalty, if applicable, is included or waived.
  • If selling or refinancing, let your closing agent or new lender request the payoff directly — they often have standard procedures that speed processing.

For more on how servicers handle billing and payoff operations, see: How Loan Servicers Work: From Billing to Payoff.

Common mistakes to avoid

  • Using an outdated payoff letter and wiring an incorrect amount.
  • Failing to request a paid‑in‑full letter or lien release after payoff.
  • Relying on verbal payoff quotes — always get a written payoff statement with a good‑through date.

After payoff: what to expect

Once the lender posts your payoff, you should receive a paid‑in‑full letter and, for secured loans, a lien release or reconveyance. If the lender doesn’t record the release within a reasonable time, follow up in writing and, if necessary, check with your county recorder or state UCC filings.

Frequently asked practical questions

  • Will a payoff letter show the exact final amount? Yes — but the total changes daily with per‑diem interest; pay by the good‑through date or request a reissued statement.
  • Can I get one for every loan? Yes. Borrowers should request payoff letters for mortgages, auto loans, business loans, and other secured debts when closing, refinancing, or selling.

Sources and further reading

  • Consumer Financial Protection Bureau — general guidance for borrowers (consumerfinance.gov).

Professional disclaimer: This article is educational and does not constitute personalized legal, tax, or financial advice. For decisions affecting large balances, property transfers, or legal claims, consult a licensed attorney or financial advisor.