Refinancing? Here’s Why Your Payoff Amount Is More Than Your Statement

Hey guys, welcome back to this week's mortgage matters in minutes. That's what these are all about is getting education and mortgage information to you in a matter of minutes, not hours like in lengthy podcasts. But I'm Brent Rasmusen, owner of Mortgage Specialists. And today we're going to talk about a topic that I forget comes up quite often during refinancing. And it comes all up at the end of the process when they're looking through their final sets of numbers and they're saying,"Wh is the payoff on the final closing disclosure significantly higher than what my mortgage statement is?" And when we're working with clients in refinancing, we always work to educate and sit down with them and explain to them upfront, here's the numbers, here's why we assume this or why we assume that. But many times people don't always sit down, review, and pay attention to the numbers to the very end. And we've had a client here recently that uh chose to go to a different place uh and they found us afterwards and they weren't explained all the numbers and we sat down with them to have them understand it, which thought this is a great time to discuss that. So yes, your mortgage statement is going to give you a balance each and every month when you receive your statement. That's just a snapshot in time. That's not exactly what you owe. Because if we need to pay off that mortgage loan, which is a legal lean, meaning if you don't pay it off, they can come back later and foreclose on you, we need to know every dollar and cent that needs to be paid off. And how I describe it to most clients is when you made your first house payment, it wasn't till 30 or 45 days later after you closed. And that's the additional interest now that we're adding back in at the end of the process. Another way of thinking of it is when you make your mortgage payment, it is in the arars. Meaning if you make your payment in February 1st or on the February 1st payment, it's for interest in January. When you normally paid rent, if you paid a February 1 rent payment, that would be for the month of February. So technically, your mortgage payment is always a month behind, even though it shows as you being caught up and paid accurately on your credit report. So when we are looking to finalize your refinance transaction or even if we're looking to sell your house, we get a written payoff from the lender itself that says, "Here's what the final amount is." And it will break down the numbers for you. It'll say your balance from your previous statement, any days of interest. Some certain lenders have extra fees. They might have money that's either short in the SQL account or they might credit you some escrow account right on that payoff. So, the payoff letter is what you want to look at to see the specific details of what is being charged to you. And that's what's going to give us the breakdown of what's going on. Most people don't always remember when they closed on their house on June 15th, four years ago. Well, your payment doesn't start right away on July 1st. It starts on August 1st. So that August 1 payment is for the interest in July. And then from that June 15th closing till the end of June, that 15 16 days, you're going to get charged that on the final closing statement when you bought your house. So it's all a timing aspect. And that happens a lot with taxes and insurance when they come due, how much money is in your escrow account, if you make an extra payment, how much more goes into your escrow account. So, it's all debits and credits, but I can assure you that the mortgage lender or whoever is giving us the quote is not overcharging you. We have to guesstimate an additional five business days because when we send that wire off that lender, we don't know within how many days exactly are they going to apply that payment. So once we get a number, we'll send that off to them. Anything they paid off extra comes back to you as a refund. Whether that is days of interest, whether that's your escrow account, uh things like that as well. So this is not an unusual question. nearly comes up on every transaction for refinancing and we want to work to get that information out there is because interest rates now while they're coming down more and more people are talking about refinancing and we want to make sure again they have the education and the information they need. I'm Bren Rasmmanson, owner of Mortgage Specialist and love to help you out with any of these types of questions or whether you're just needing to purchase a home with a mortgage or refinance your mortgage. We're always here to assist and just a phone call away at 402991-5153 or you can check us out on our website mtg-sp specialists.com and have a great rest of your week. We'll see you here next time for our 200th mortgage matters and minutes episode and hope to make it another great one for you.

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