Closings glossary
Payoff letter
A lender's statement of the amount required to satisfy and release a mortgage on a specific date, with a daily interest figure for any later date.
What is a payoff letter?
Quick Answer
The full definition
A lender's statement of the amount required to satisfy and release a mortgage on a specific date, with a daily interest figure for any later date.
Which related terms should you know?
These are the terms that come up alongside payoff letter in the same file.
- Satisfaction of mortgage
- The instrument that releases a paid mortgage from the record. Until it is recorded, the old mortgage still appears as a lien against the property.
- Clear to close
- The point at which lender conditions are satisfied and the transaction can be scheduled and funded. Title clearance and payoff figures usually have to land before a lender issues it.
- Closing statement
- The itemized accounting of every credit, debit and disbursement at a closing. Commercial deals use a HUD-1 or ALTA settlement statement; consumer mortgage closings pair it with the Closing Disclosure.
- CEMA (Consolidation, Extension and Modification Agreement)
- An agreement in which an existing mortgage is assigned and consolidated with new financing rather than being satisfied and re-recorded. It requires the current lender's cooperation and extra lead time.
- Lien
- A claim against property securing payment of a debt. Liens rank by priority, and closing normally means paying or releasing every one ahead of the buyer's interest.
Where does payoff letter come up in a New York City closing?
A Brooklyn payoff good through the 30th expires before an adjourned closing on the 3rd, and the updated letter adds four days of per diem interest.
What else should you read before closing?
Questions this raises
Closing checklists
- Residential sale closing checklistWhat a New York seller has to deliver: payoff letters, the deed, the affidavit of title, transfer tax returns, cured violations and marketable title.
- Refinance and CEMA closing checklistA New York refinance has no deed and no owner’s policy. It turns on the payoff, lien priority, the lender’s policy and whether a CEMA is available.
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.