Usually, people pay off their mortgage when they either refinance or sell their home and get a new mortgage. There are also those who are able to pay off their mortgages on their own. Here, we answer some common questions about the payoff process. Parts of the process are the same for every lender, while other details are specific to Quicken Loans.
Requesting a Payoff
Paying off your mortgage isn’t too complicated, but it’s also not as simple as signing in to your account and paying off the balance. If you’re refinancing or selling your home, a third party – usually the title company – will request the payoff. The process takes at least 48 hours when dealing with a third party because there are several steps involved so the lender can handle the payoff with the title company. And, the title company can now call into our phone system to request a written payoff statement.
If you’re paying off your mortgage on your own, you’ll need to call to request a payoff letter. This document will have the exact amount you need to pay through whatever date you request. At Quicken Loans, we’ll email or fax the letter back to you and upload it to MyQL, so you may be able to pay off your loan the same day if you want. You can also request to document with the pay-by-phone system by calling (800) 508-0944. We added this feature to make it easier for you to get the information you need about your payoff without speaking to a representative.
You have to request a payoff letter so we can precisely calculate the final amount, including interest and any fees, such as the county recording fee, or statement fee, which the amount could depend on your state and how many times a payoff quote was requested. Some loans accrue interest daily and some monthly. Even if yours is monthly, your lender needs to calculate the exact amount of interest you’ll owe on the day you pay.
It’s important to update your mailing address if you’re moving so that we have your correct address on file in case you’re due an escrow refund. And so we can send you your tax forms at the end of the year.
Making the Payment
Along with the final payoff numbers, the letter will have a “good-through” date. This means the total amount you need to pay off is only good through the date shown because additional interest will accrue after that date. You’ll need to request an updated payoff letter after the good-through date.
A mortgage must be paid off with certified funds – either a wire transfer from your bank or a certified check. For Quicken Loans clients, it’s important to note that you can’t just sign into MyQL and pay the total balance you see there. When you do send the payment, we’ll send you an email confirming we received the funds.
If there’s money left in your escrow account after you’ve paid off your loan and/or you overpaid the loan (by paying before the good-through date, for example), the extra money will be sent back to you. If you’re refinancing or selling your home and buying a new one with Quicken Loans, we may net your escrow, which means we’ll take whatever money is left in your escrow account and apply it toward your payoff amount.
Again, this will depend on your loan type. On FHA mortgages, for example, the lender can’t net the escrow account, so you would receive an escrow refund check from your old loan instead of having the balance applied to your new principal.
If you are due an escrow refund on your Quicken Loans mortgage, we’ll process it within 10 to 12 business days from when we receive the payoff, and you can choose to have it sent as a check or deposited directly into your bank account.
Sometimes the lender has to hold money in your escrow account after your loan has been paid off. This is because mortgage insurance is paid in arrears, meaning it’s paid at the end of the time period you’re paying for instead of upfront. So your lender may have to hold on to some of your escrow funds to cover those last costs if you have mortgage insurance.
After your mortgage has been paid off, it has to be recorded with the county, along with what’s called the Discharge of Mortgage document. Some states require the Discharge of Mortgage to be sent to you from your lender, while others require the county to send it to you. So when you receive it will depend on your state’s requirements.
If you have automatic payments set up for your mortgage, either through your lender or your bank, make sure to cancel them as soon as your loan has been paid off.
Contact your lender to find out what your state requires for the Discharge of Mortgage and to get answers to other questions about your loan.
Remember, you can also request your payoff through our pay-by-phone system by calling (800) 508-0944. You can do this whether you’re actually paying off/requesting a quote in writing, or if you’re just wondering how much is remaining to payoff.
If you have more general questions or comments for us, share them below.
Source: Home Loans