Mortgage Payoff After Home Sale: What You Need to Know

After selling your home and closing on the sale, it is important to understand the mortgage payoff process and when you can expect the funds to be disbursed. This article will provide a comprehensive guide to help you navigate this crucial aspect of the home sale process.

Understanding the Closing Settlement Statement

Upon reviewing the closing settlement statement, you will notice several key details:

Mortgage Balance Plus 27 Days of Interest: The mortgage balance, plus 27 days of interest, is typically paid to the lender on the closing date. No Ongoing Ownership or Liability: As of the closing date, you no longer own the property and no longer bear financial responsibility for it. Property Taxes: Property taxes for a certain number of days have been paid up to the closing date, with the remainder being charged to the buyer.

It is also essential to ensure that all utilities are switched over to the buyer's name as of the closing date to avoid any disputes or additional charges.

The Role of the Escrow Company

The escrow company plays a vital role in the home sale process. Once the transaction funds are released, the escrow company typically wires the mortgage payoff to the lender on the same day. This ensures that the funds are credited to your lender as soon as possible.

For example, if you closed on the 27th, the escrow company would have wired the payoff on that same day, even before the file was released for recording.

Verifying the Payoff

To ensure that the mortgage payoff was received by the lender, you should:

Contact Your Mortgage Holder: Call your mortgage holder to confirm that the payoff has been received. Contact the Escrow Agent: If the mortgage holder indicates that they haven't received the payoff, contact your closing officer or escrow agent for further assistance.

The Timing of Fund Disbursement

While mortgage payoffs are usually wired within a day or two of closing, this can vary depending on your state. Generally, the payoff will include a few extra days of per diem interest to account for any delays. Most mortgages in the US are due on the 1st of the month, but payments are considered late only after the 15th.

To confirm that the payoff was sent to your bank, you can also check with the title company you closed with. Most funds are wired nowadays, so the balance should be reflected within a few hours or a full day, depending on the funds' arrival.

Properly Transitioning Utility Payments

It is crucial to ensure that all utility services are switched over to the buyer's name as of the closing date. This involves:

Switching Utilities: Have the utilities switched to the buyer's name as of the closing date to prorate the charges for the month. Utility Deposits: Any utility deposits you paid should be returned to you or applied against your final bill.

By following these steps and keeping track of important dates and payment responsibilities, you can ensure a smooth and stress-free transition after selling your home.