Beware of your final mortgage payoff amount!

By
Real Estate Agent with Progressive Realty (Boise Idaho) www.Progressive-Realty.info DB-17066

I was at another closing today and my client questioned the amount the title company showed as their mortgage payoff.

I explained that when you get your figure online or from your last statement, that was for the principal balance on a given day; however at closing they will take that figure and add the cumulative interest between that date and the date of closing.  Remember when you bought your home with a mortgage, they let you skip a month's payment at the beginning?  Well, you end up paying it back at the end.

However; in this case, the amount still appeared to be too high.  It turns out they had made a payment after the title company had received their loan payoff so there should have been less principal and less accumulated interest.  They just ordered a new payoff amount and corrected it while we were still at the closing so it turned out fine, but if you are counting on a specific amount at closing (say to buy your next house, etc.) it pays to double check.

If my client didn't catch that, it would have taken a few days or weeks for their lender to reimburse them for the overpayment.

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mortgage payment
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jim paulson
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Rainer
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Randy Kirsch
Right Trac Financial Group, Inc., NMLS# 2709 - Manchester, CT
(NMLS# 1012303) Your Dedicated Mortgage Consultant

When I was actively involved in the closing process, we would tell sellers not to make their mortgage payment unless it looked like the closing would be delayed beyond the end of the current month.  It is tricky as you don't want to damage the seller's credit, but you want to make sure that the payoff number is accurate.

Thanks for sharing.  I don't think a lot of people give this aspect of a closing as much thought as they should.

 

Dec 30, 2014 07:32 AM #1
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jim, around here, they also add a few extra days in case the payoff takes longer than expected to reach toe mortgage company, who sends any appropriate refund to the sellers.

Dec 30, 2014 12:23 PM #2
Rainmaker
299,380
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

I think I will add a line on my loan payoff requests specifically asking the seller when they made their last payment and plan to make the following payment.  I typically don't have an issue at closing, but with this seller's payment posting on the 13th of December, it almost slipped through the cracks temporarily.

Dec 31, 2014 12:51 AM #3
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Rainmaker
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Jim Paulson

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