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Mortgage Payoff Statements: What They Are & Why Timing Matters

By Huber Bongolan

When closing a real estate transaction, a mortgage payoff statement is a critical document. But beyond just being a formality, understanding when and how to order a payoff statement can make a difference in whether a deal goes smoothly or falls apart at the last minute.

At Flipside Lending, we know that timing is everything—especially when it comes to ordering a payoff statement. Get it too early, and you could risk the current lender stepping in to retain the borrower. Wait too long, and you could delay closing. Here’s what you need to know.

What Is a Mortgage Payoff Statement?

A mortgage payoff statement, sometimes called a payoff letter, is an official document from a lender that provides the exact amount needed to pay off an existing loan as of a specific date.

It includes:

  • Current principal balance – The remaining loan amount.
  • Accrued interest – Any interest owed up to the payoff date.
  • Additional fees – Possible penalties, prepayment fees, or service charges.
  • Good-through date – The date until which the stated payoff amount is valid.
  • Instructions for payment – Who to send funds to and acceptable payment methods.

This document is essential in refinancing, selling a property, or paying off a loan early. However, there’s more to it than just requesting a statement.

Why Timing Matters When Requesting a Payoff Statement

Most borrowers (and even some brokers) don’t realize that ordering a payoff statement too soon can tip off the existing lender. Here’s why that can be a problem:

  1. The Current Lender Might Try to Retain the Borrower

    The moment you request a payoff statement, you’re sending a clear signal to the lender: your borrower is leaving. Many lenders don’t want to lose a performing loan, especially if they’re making a solid return on interest.

    This can trigger the lender to reach out to the borrower and make a counteroffer, whether by lowering the interest rate, adjusting terms, or offering a refinance option. If the borrower takes the bait, your deal is dead before it even closes.

  2. The Payoff Amount Is Only Valid for a Short Window

    Because interest accrues daily, the payoff statement is only valid through a certain date—usually less than a few weeks. If closing gets delayed, you’ll need to request a new payoff statement, which can add additional administrative delays.

  3. You Might Pay Unnecessary Fees
    Some lenders charge a fee for issuing a payoff statement. If you request it too early and have to re-order it later, those costs can add up.

Flipside’s Strategy for Ordering a Payoff Statement

At Flipside Lending, we take a strategic approach to requesting payoff statements to ensure we keep the deal intact and avoid tipping off the current lender too soon.

Here’s our best practice:

  • Use estimates first – Instead of requesting an official payoff immediately, we calculate an estimated payoff based on the borrower’s latest mortgage statement.

  • Wait until the deal is firm – We don’t order the payoff statement until we’re at the final stages of closing, minimizing fees and unnecessary paperwork.

Final Thoughts

A mortgage payoff statement is a crucial document when refinancing or closing a real estate transaction, but ordering it at the wrong time can create unnecessary challenges.

At Flipside Lending, we play it smart—timing our payoff statement requests to protect the deal, keep borrowers on track, and ensure a smooth closing.

Interested in learning more? Contact us today to discuss your next deal.

Good luck out there, my friends. I’m always happy to help so feel free to email me at hbongolan@flipsideloans.com.

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NMLS #2655708. Origination fees and other fees may apply. This is not an offer to lend. Any financing will be subject to certain restrictions and requirements, including but not limited to a credit evaluation and approval of the subject property. To qualify, a borrower must meet underwriting requirements. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate. Your actual rate depends on a variety of factors. Rates, terms, and conditions are subject to change from time to time without notice.