Documents to Send in When Paying Off a Mortgage
- A mortgage payoff statement should be included with your final loan payment. Instead of using the amount shown on your mortgage statement, you can call your loan servicer to obtain a more accurate payoff figure. Your loan servicer can provide a payoff amount for the date that you want to remit your loan balance in full. Ask your loan servicer to mail a copy of the payoff statement or provide a fax number to receive the document.
- Certified funds should be sent toward your final mortgage payment, as your lender might charge interest during the time that it takes for a money order or personal check to clear. Using payoff funds, such as an official bank-issued check or a cashier's check, your lender can readily apply the amount toward your outstanding mortgage balance. You should write your account number on the certified check before sending the payment to your lender.
- Details that help identify your account should accompany documents to pay off a mortgage loan. A payment coupon, copy of a recent mortgage statement or other document that reflects your account information should be supplied when paying off a mortgage loan. Detailed account information could help ensure that your lender applies your funds to the proper account.
- Generally, a homeowner can pay off a mortgage loan at anytime. However, you should check your mortgage note for prepayment penalties that might apply. Some lenders offer below-market interest rates in exchange for certain time commitments. If you payoff your loan too early, the lender could enforce a prepayment fee. For instance, if your loan was originated 18 months ago and has a two-year prepayment penalty, you must decide whether it's more beneficial to wait another six months to avoid the fees. Your mortgage note should be documented to reflect the terms of any prepayment penalties.
