Mortgage payoff questions

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SlowMovingInvestor
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Joined: Sun Sep 11, 2016 11:27 am

Mortgage payoff questions

Post by SlowMovingInvestor » Fri Apr 06, 2018 9:57 am

I'm paying off my mortage and I received a payoff quote from the servicer.

1) I'm a little surprised to note that the quote is valid till the end of the month. Does that mean I'd be better off paying as late as possible this month since I can collect interest on the balance in my online bank account, while I'm not being charged any interest by the mortgagee ?

2) The payoff quote also includes a 'county recording fee'. Does this mean the servicer will directly contact my county to release the lien ? I did ask a CSR for the servicer on the phone, and she didn't seem to know if I'd just get a letter and would have to take it to the county office myself or not. [ If I have to take the letter myself to my county's office, it seems I shouldnt be charged a fee at all]

mcraepat9
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Re: Mortgage payoff questions

Post by mcraepat9 » Fri Apr 06, 2018 10:00 am

SlowMovingInvestor wrote:
Fri Apr 06, 2018 9:57 am
I'm paying off my mortage and I received a payoff quote from the servicer.

1) I'm a little surprised to note that the quote is valid till the end of the month. Does that mean I'd be better off paying as late as possible this month since I can collect interest on the balance in my online bank account, while I'm not being charged any interest by the mortgagee ? I think that's right, though how much are you really saving by doing that? I am guessing not much.

2) The payoff quote also includes a 'county recording fee'. Does this mean the servicer will directly contact my county to release the lien ? I did ask a CSR for the servicer on the phone, and she didn't seem to know if I'd just get a letter and would have to take it to the county office myself or not. [ If I have to take the letter myself to my county's office, it seems I shouldnt be charged a fee at all] Varies by lender, but most lenders will file the lien termination for you in the county land records, and that fee is supposed to reflect the filing fee. How much is the fee they are charging you? Have you checked the county land records office and see how much it costs to file a lien termination there?
Last edited by mcraepat9 on Fri Apr 06, 2018 10:01 am, edited 1 time in total.
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LiveSimple
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Re: Mortgage payoff questions

Post by LiveSimple » Fri Apr 06, 2018 10:01 am

It does not matter, the mortgage will refund any differences based on when the money is received.
There is no free lunch.

Also yes the lender contacts the county and sets the records, but you can keep an eye to make sure you get that letter from the county.

HereIAm
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Re: Mortgage payoff questions

Post by HereIAm » Fri Apr 06, 2018 12:53 pm

Mortgages are paid in arrears. That's why it's good through the end of the month. Any time before that will earn you a slight credit in interest.

SlowMovingInvestor
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Re: Mortgage payoff questions

Post by SlowMovingInvestor » Fri Apr 06, 2018 2:04 pm

HereIAm wrote:
Fri Apr 06, 2018 12:53 pm
Mortgages are paid in arrears. That's why it's good through the end of the month. Any time before that will earn you a slight credit in interest.
So they'll actually credit if I pay early ? That would make a lot of sense, but the payoff doc doesn't mention it, and it shows the same amount whether I pay on (say) April 13th or the 30th. We're not talking about a lot of money here, but no reason I shouldn't get an extra $100 or so in interest from my bank if I can pay late and not incur any interest.

nolesrule
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Re: Mortgage payoff questions

Post by nolesrule » Fri Apr 06, 2018 5:18 pm

The credit you would get for paying early is based on the mortgage interest rate and when the payment is received, since the payoff amount is calculated on the assumption you'd pay it on the last date.

Of course, there is a delay for processing any refund of overpayment on the interest during which you'd be earning 0% on the amount of the refund, but all other things being equal you would only benefit by waiting till the last day if your interest rate where the payoff money is currently sitting is higher than the mortgage interest rate.

Depending on the size of the mortgage balance, any potential arbitrage opportunity of the interest rates may or may not be negligible.

TravelforFun
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Re: Mortgage payoff questions

Post by TravelforFun » Fri Apr 06, 2018 5:22 pm

This is a few years ago. About a month after I sent in the payoff amount to my mortgage company, I got a check from them for paying off a few days early plus my remaining escrow amount, and a copy of the county record.

TravelforFun

SimonJester
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Re: Mortgage payoff questions

Post by SimonJester » Sat Apr 07, 2018 5:39 pm

I would not wait until the last day of the month, you want the payment to post before the end of the month. If there were some sort of delay you might end up owing interest for part of the next month.

In my area a mortgage is actually recorded as a deed of trust against your property and what the bank actually is sending to the county is a release of that deed of trust. The only thing I received when paying off my mortgage was a letter saying the account was paid.

I later wrote to my mortgage company requesting my original wet note returned stamped paid in full. They sent that back along with the original signed deed of trust. This did take some finagling but was worth it to me to have the original documents back.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

tioscrooge
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Re: Mortgage payoff questions

Post by tioscrooge » Sun Apr 08, 2018 2:05 am

When i requested a payoff amount - it was principal plus a sizeable interest and also valid till the end of the month.

Instead of paying off that quoted amount, I paid off most of the principal and left only one dollar of principal. I requested the payoff amount again. All of a sudden all the interest was gone. Payoff amount was $1.01 and county recording fees.

You will save a lot by paying off principal and leave only one dollar of loan before you request a payoff.

nolesrule
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Re: Mortgage payoff questions

Post by nolesrule » Sun Apr 08, 2018 9:55 am

tioscrooge wrote:
Sun Apr 08, 2018 2:05 am
When i requested a payoff amount - it was principal plus a sizeable interest and also valid till the end of the month.

Instead of paying off that quoted amount, I paid off most of the principal and left only one dollar of principal. I requested the payoff amount again. All of a sudden all the interest was gone. Payoff amount was $1.01 and county recording fees.

You will save a lot by paying off principal and leave only one dollar of loan before you request a payoff.
Doesn't really seem any different from making the full payoff and then getting a refund of non-accrued interest other than in timing.

tioscrooge
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Re: Mortgage payoff questions

Post by tioscrooge » Wed Apr 11, 2018 5:55 pm

nolesrule wrote:
Sun Apr 08, 2018 9:55 am
tioscrooge wrote:
Sun Apr 08, 2018 2:05 am
When i requested a payoff amount - it was principal plus a sizeable interest and also valid till the end of the month.

Instead of paying off that quoted amount, I paid off most of the principal and left only one dollar of principal. I requested the payoff amount again. All of a sudden all the interest was gone. Payoff amount was $1.01 and county recording fees.

You will save a lot by paying off principal and leave only one dollar of loan before you request a payoff.
Doesn't really seem any different from making the full payoff and then getting a refund of non-accrued interest other than in timing.
If only the last monthly payment is due at the time of payoff request, I think you may be correct. I had a different experience. May be we are not comparing apples to apples. In a scenario where, for example, $20,000 is left on the mortgage, the payoff amount will have higher interest, than if you pay $19,999 to principal and then ask for payoff amount.

riverguy
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Re: Mortgage payoff questions

Post by riverguy » Thu Apr 12, 2018 5:57 am

tioscrooge wrote:
Sun Apr 08, 2018 2:05 am
When i requested a payoff amount - it was principal plus a sizeable interest and also valid till the end of the month.

Instead of paying off that quoted amount, I paid off most of the principal and left only one dollar of principal. I requested the payoff amount again. All of a sudden all the interest was gone. Payoff amount was $1.01 and county recording fees.

You will save a lot by paying off principal and leave only one dollar of loan before you request a payoff.
You realize you saved nothing right?

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willthrill81
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Re: Mortgage payoff questions

Post by willthrill81 » Thu Apr 12, 2018 11:55 pm

SlowMovingInvestor wrote:
Fri Apr 06, 2018 9:57 am
I'm paying off my mortage and I received a payoff quote from the servicer.

1) I'm a little surprised to note that the quote is valid till the end of the month. Does that mean I'd be better off paying as late as possible this month since I can collect interest on the balance in my online bank account, while I'm not being charged any interest by the mortgagee ?

2) The payoff quote also includes a 'county recording fee'. Does this mean the servicer will directly contact my county to release the lien ? I did ask a CSR for the servicer on the phone, and she didn't seem to know if I'd just get a letter and would have to take it to the county office myself or not. [ If I have to take the letter myself to my county's office, it seems I shouldnt be charged a fee at all]
I used to work for a mortgage company. If you pay off the mortgage before the date shown on the quote, they will refund you the difference in interest.

Most counties charge a recording fee to remove a lien, and this is being factored in by your mortgage company. It's generally quite small, and taking the letter there yourself won't help you to avoid paying it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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