A payoff, in regards to a loan, is the total amount of money that needs to be paid to satisfy the terms of the loan and completely pay off the debt. It includes the principal balance of the loan, plus any accrued interest, fees, and penalties.
The payoff amount may be different from the current balance of the loan. For example, if the loan has a prepayment penalty, the payoff amount will be higher than the current balance. Conversely, if the loan has a prepaid interest rebate, the payoff amount will be lower than the current balance.
To get the most accurate payoff amount, you should contact your lender. They will be able to provide you with a payoff statement that shows the exact amount that needs to be paid to satisfy the loan.
Here are some reasons why you might want to get a payoff statement:
- You are planning to pay off your loan early.
- You are refinancing your loan.
- You are selling the property that is collateralized by the loan.
- You are closing your loan account.
You can usually request a payoff statement online or by phone. Your lender may charge a fee for providing a payoff statement, but this fee is typically waived if you are paying off your loan early.