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Demand for Payoff


Statement that states the remaining terms of a loan.


An overwhelmingly percentage of properties are purchased using some form of financing (traditional loans, FHA loans, VA loans, borrowing from friend/relative).  In the event the loan will be paid in full, the escrow officer will request a demand for payoff from the lender to the seller.

A demand for payoff is a statement created by a lender that includes the remaining terms of a loan including the interest rate, loan balance and prepayment penalty clauses.

A demand for payoff more commonly referred to as a payoff statement is a statement typically requested by a borrower to understand the terms of their debt with the lender.

When Is A Payoff Statement Used

When a borrower refinances their mortgage, the new lender will demand a payoff statement. The payoff statement is proof that once the new loan funds, the old loan balance will be removed and therefore future claims by the old lender will not be valid.

A payoff statement might also be requested by a debtor to review the debts they owe to remove the account. The payoff statement will include the name of the borrower, the debt, the interest rate, and other terms of the account.

The lender might provide borrowers with the statement to highlight the money they are owed. Before a lien is placed on a borrower’s property or records, the lender will likely provide some sort of statement, either a payoff statement or other as proof of the debt.

Satisfying a Loan

When a borrower wishes to pay off a debt, they can request a payoff statement to review the remaining terms of the loan. Payoff statements can be demanded at anytime by a borrower that wants to verify the state of the loan. Borrower’s can request this statement in person, through a customer service phone call, submit a form to an online lender, or send a letter stating the request. Lenders are required to provide the statement within a reasonable period of time. The terms stated on the payoff statement will be reflect the next payment schedule. The purpose of this is to state the only the most recent statement, even if it is a future date.

Loans that have a prepayment penalty will state this on the payoff statement. Lenders can charge borrowers a fee for multiple requests of the statement.

One of the main reasons a payoff statement might be requested is to refinance a first loan and consolidate the second loan into the first loan. This typically occurs after a borrower’s property has increased in value and can therefore qualify for a new first while paying off the second. In this case, the payoff statement will be issued by the second lender so that the first lender can verify the payoff amount of the second loan. If there is enough equity, the second loan will be paid off and only one loan will remain.

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