Brenda Kellen: Time to close: What is my mortgage pay-off? |

Brenda Kellen: Time to close: What is my mortgage pay-off?

Q. I don’t understand how the pay-off for my mortgage is calculated.

A. It is confusing. I called the title company yesterday to review the details and will attempt to explain as clearly as possible.

Interest is paid in arrears and the interest is typically the majority of your payment. So, a July mortgage payment is covering the interest for June. Principle is paid with the current month. July mortgage payment is July principle payment. If the loan is interest only, there is not a principle portion of the payment.

The title company calls the lien holder to determine the pay-off amount. This amount is pro-rated to the day of closing. If the seller has a first and a second, both are calculated the same way. The title company collects a five day “cushion” in addition to the amount the lien holder requires for full pay-off of the loan(s). The cushion protects the title company from a shortage in case paperwork or other requirements for successful closing are delayed. If there are no delays, the cushion amount of money will be refunded to the seller after closing by the lien holder.

The lien holder charges a $10 to $30 fax fee for the pay-off request and the recording fee for the release is $21. These charges are noted on the settlement statement along with the pay-off amount. If the seller has a first and a second, these fees will apply to both.

For more insight into the current real estate market, please contact me directly at 970.485.1115, visit my website at, or e-mail me at I have been selling with Omni Real Estate for over 10 years and help buyers and sellers in both Grand and Summit County.

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