Mortgage payoff logistics

[orangehairfella]

We're paying off the mortgage. The funds should be available on Tuesday and we just want to get it done. We looked at the payoff statement available on our servicer's website and realized we'd be paying $96.50 in fees

Balance remaining $ 61,769.13
Total amount due $ 61,841.09

Recording Fee $ 10.00
Lien Release Fee $ 21.50
Demand Fee $ 15.00
Mortgage holder's wire Fee $ 25.00
My banks wire Fee $ 25.00

Ok, so the first three are, annoyingly, built into the balance. But those last two are avoidable. The servicer's website has a silly disclaimer about accumulated interest and not paying the total balance online.

What would happen if I just paid say, $61,750 as an ACH from their online interface? That should leave me with a balance of ~$19.13 that I could simply make as my last payment right? Avoiding $50 in wire transfer ridiculousness.

Anyone else gone through the logistics of making that last payment?

 

[pb4uski]

Just call them and they should be able to give you the payoff as of a certain date and let you know if you can ACH or just mail them a check and avoid the $50 in wiring fees. Even if you end up overpaying them a little, they will likely send you a refund for any overpayment once they have sorted it all out.

 

[Senator]

Fidelity offers a wire service for $10. You can transfer the funds to fidelity via ACH, and wire it from there.

You will likely pay more in interest while waiting for the ACH to clear than the original wire fee.

Maybe the bank will give you a break? A one-time free-be? Match a price?

Can you just mail a personal (or certified) check to the bank for the payoff amount?

Add up the daily per diem and you will likely find that the wire transfer saves money.

 

[meierlde]

Fidelity offers a wire service for $10. You can transfer the funds to fidelity via ACH, and wire it from there.

You will likely pay more in interest while waiting for the ACH to clear than the original wire fee.

Maybe the bank will give you a break? A one-time free-be? Match a price?

Can you just mail a personal (or certified) check to the bank for the payoff amount?

Add up the daily per diem and you will likely find that the wire transfer saves money.

A cashiers check may be better than a personal check. (it will likley save a day or two). Then send the letter either certified or via UPS/FedEx.

 

[orangehairfella]

Fidelity offers a wire service for $10. You can transfer the funds to fidelity via ACH, and wire it from there.

You will likely pay more in interest while waiting for the ACH to clear than the original wire fee.

Maybe the bank will give you a break? A one-time free-be? Match a price?

Can you just mail a personal (or certified) check to the bank for the payoff amount?

Add up the daily per diem and you will likely find that the wire transfer saves money.

Yeah, I'd actually pay ~$20 in interest waiting for the ACH to clear.

I also just noticed that while PHH is the servicer on the loan, Wells Fargo actually owns it now. I wonder if I can just go into a Wells Fargo branch with a cashier's check and handle this?

 

[MooreBonds]

I also just noticed that while PHH is the servicer on the loan, Wells Fargo actually owns it now. I wonder if I can just go into a Wells Fargo branch with a cashier's check and handle this?

Same reason you can't just go into any other business with multiple subsidiaries and get service - they have a dedicated processing center to handle payments for their mortgage division. Their mortgage division isn't their retail banking division. Their branch would likely have to mail it to the processing center anyway.

Plus, would you really want to trust some random bank teller to accurately process your $60,000 check and have it credited properly and correctly (which I doubt they even could...but assuming they could....)

 

[jon-nyc]

I did something just like you propose - I made a large, six figure payment on my mortgage using a personal check and a payment slip from the loan book. Then after it cleared I called the bank to get the payoff amount which was then tiny. They were chill about it and accepted a personal check for the payoff.

 

[rodi]

I think Schwab waived the wire transfer fee for me when I paid off my mortgage just before retiring.

Unfortunately for me - I was paying it off right as the mortgage was being sold from the original lender to another lender and both parties denied receiving the money or record of the transfer. Fortunately, wire transfers, paper receipts of the transfer, etc were able to prove the payoff... but it took about a month to resolve.

 

[jimbee]

I also just noticed that while PHH is the servicer on the loan, Wells Fargo actually owns it now. I wonder if I can just go into a Wells Fargo branch with a cashier's check and handle this?

This is basically how I paid off my mortgage. It was held by Wells Fargo. I went to my local branch and told the teller what I wanted to do. They assigned a personal banker to me who walked me through the process, setting up the money transfer.

 

[orangehairfella]

This is basically how I paid off my mortgage. It was held by Wells Fargo. I went to my local branch and told the teller what I wanted to do. They assigned a personal banker to me who walked me through the process, setting up the money transfer.

Interesting, I saw a bogleheads thread with several others that had done the same thing, with varying success. Was Wells Fargo just the holder of the note, or were they also the servicer? Maybe I'll ride my bike over to the branch today and talk to a banker.

 

[Cobra9777]

I paid off our mortgage a couple years ago. The mortgage company website allowed you to create a payoff statement as of a certain date. I chose about 3 or 4 days in the future and wrote down the specific amount. They had no fee for an incoming wire, just a small recording fee. I then called my bank and arranged a wire transfer for the payoff amount to occur on that specific date. Their charge was $20 for the outgoing domestic wire transfer. Everything went like clockwork.

The bank told me I could also write a check or do an ACH to avoid the wire fee. But the only way they could guarantee the timing was with a wire transfer. They told me the ACH takes 2-4 days. So I figured I could calculate the payoff 5 days out and likely receive a refund for a day or two of interest. I decided to keep it clean and spend $20 on the wire. If it had been $50 like OP, I might have done the ACH.

 

[jimbee]

Interesting, I saw a bogleheads thread with several others that had done the same thing, with varying success. Was Wells Fargo just the holder of the note, or were they also the servicer? Maybe I'll ride my bike over to the branch today and talk to a banker.

Wells Fargo was the mortgage servicer. I did initiate a mortgage payoff process on Wells Fargo's website, but chickened out.
I've seen too many poorly done websites to trust it, so I did not finish using the website and visited the local branch office. There weren't any additional complications that I can remember. I also have a Wells Fargo checking account, that may have simplified the process.

 

[OMY-Syndrome]

I just joined the forum today, but I have been lurking for many years. I never really felt I had much to contribute, but I had to weigh in to this topic, because I think I have some info that can save forum members who are paying off their mortgage a few bucks.


I paid off my mortgage a few years ago, it was being serviced by Wells Fargo. I happened to know someone at the company that knew how things were calculated, and she explained it to me. I was shocked at what she told me, but I kept track of all my payments and calculated the interest as per how she told me it would be and it came out exactly right down to the penny. I am pretty confident that the way interest is calculated was not unique to WF, I am guess it is probably standard throughout the industry and dictated by language in the mortgage note.


When the bank calculates interest, they take your principle balance, on the first day of the month, and multiply that by the annual interest rate on your mortgage /12. Then they add that amount of interest to your loan.


The key here is that they use the outstanding balance on the first day of the month. This means if you make an extra payment towards principle on the 2nd day of the month, or the 30th of the month it doesn't matter the amount of interest you pay will be the same. So the moral of this is if you want to make an extra payment towards principle you should make it at the end of the month.


Now when it comes time to pay off the mortgage they do things a little differently. At payoff day, they take your current balance and pro-rate the interest depending on what day of the month you are paying it off on. Notice I said they take the current balance, they do not look at what the balance was at the beginning of the month. In other words, if you have a $10,000 balance at the beginning of the month, pay $9,900 on the 5th of the month, and then pay off the mortgage on the 10th, they would figure your last months interest as 10 days interest on $100. It may seem crazy, but this is how they did it for me.


As another really cool feature if your mortgage is serviced by Wells Fargo, like mine was. (If it is serviced with another bank I would see if they have this ability too.) The banks computers is hooked into the Mortgage departments computers, so you can ask the teller for your current mortgage balance. You can also make your currently monthly mortgage payment, and extra mortgage principle payments any day you want. You can even pay with cash if you want to. No need to talk to a banker, just go right to the teller.


I don't remember for sure on the very last payment, but I think the teller gave me a payoff quote. If she didn't then I probably got the pay-off quote on line, and then took that in to the bank and paid the teller. I do remember the teller congratulating me on paying off my mortgage.

 

[Big_Hitter]

If your balance is high enough your bank should waive the wire fee - When I pay off mortgages I just pay what they tell me cause I'm a lemming...

 

[Ticker]

congrats on the payoff!
I remember doing mine, and how relieved I felt once the
transaction was completed. There's no feeling quite like owning your house
outright. Hope you get the same rush as I did!

My sister in law, a mortgage specialist, advised against holding a mortgage burning ceremony-she preferred that I keep all paperwork associated with the mortgage.

 

[ChiliPepr]

If your balance is high enough your bank should waive the wire fee - When I pay off mortgages I just pay what they tell me cause I'm a lemming...

reminds me of what I did when I bought my house... I had to get a certified check to bring to my closing of about $300k... Went to my bank and they told me there would be a $20 charge for the check... So, I told them, no thanks, I will just pick up the cash tomorrow. They brought in a supervisor who immediately said "Let me give you a free check this time"

 

[Dash man]

I paid off my mortgage 5 years ago by wiring the funds. I was so happy to be completely debt free I didn't care about the $20 wire fee. Chase Mortgage didn't charge me to record the mortgage satisfaction document and sent a letter of congratulations. I was able to verify online the document was recorded.


Sent from my iPhone using Early Retirement Forum

 

[eta2020]

I did something just like you propose - I made a large, six figure payment on my mortgage using a personal check and a payment slip from the loan book. Then after it cleared I called the bank to get the payoff amount which was then tiny. They were chill about it and accepted a personal check for the payoff.

Same thing with me. It was just an ordinary check send in ordinary envelope with standard postage.

I slightly overpaid and they mailed me check for difference back.

 

[orangehairfella]

I ended up just wiring the money like a sucker. When it came down to it I didn't want to mail a check that big, and there were some bogleheads horror stories about servicers refusing huge ACH payments...but sitting on them for a week or more before rejecting them. Between the possibility of accumulating interest and the mental anguish that the delay would cause me, the wire felt worth it.

But now its done and we're once again debt free. Took 3 years, 11 months.

 

[Meadbh]

That's what I would have done. Congratulations!

 

[Cassius King]

Congrats! I think I would have done the same thing. Should be a peace of mind moment, not stressing over timing/fee's, etc.

 

[MissMolly]

I just joined the forum today, but I have been lurking for many years. I never really felt I had much to contribute, but I had to weigh in to this topic, because I think I have some info that can save forum members who are paying off their mortgage a few bucks.


I paid off my mortgage a few years ago, it was being serviced by Wells Fargo. I happened to know someone at the company that knew how things were calculated, and she explained it to me. I was shocked at what she told me, but I kept track of all my payments and calculated the interest as per how she told me it would be and it came out exactly right down to the penny. I am pretty confident that the way interest is calculated was not unique to WF, I am guess it is probably standard throughout the industry and dictated by language in the mortgage note.


When the bank calculates interest, they take your principle balance, on the first day of the month, and multiply that by the annual interest rate on your mortgage /12. Then they add that amount of interest to your loan.


The key here is that they use the outstanding balance on the first day of the month. This means if you make an extra payment towards principle on the 2nd day of the month, or the 30th of the month it doesn't matter the amount of interest you pay will be the same. So the moral of this is if you want to make an extra payment towards principle you should make it at the end of the month.


Now when it comes time to pay off the mortgage they do things a little differently. At payoff day, they take your current balance and pro-rate the interest depending on what day of the month you are paying it off on. Notice I said they take the current balance, they do not look at what the balance was at the beginning of the month. In other words, if you have a $10,000 balance at the beginning of the month, pay $9,900 on the 5th of the month, and then pay off the mortgage on the 10th, they would figure your last months interest as 10 days interest on $100. It may seem crazy, but this is how they did it for me.


As another really cool feature if your mortgage is serviced by Wells Fargo, like mine was. (If it is serviced with another bank I would see if they have this ability too.) The banks computers is hooked into the Mortgage departments computers, so you can ask the teller for your current mortgage balance. You can also make your currently monthly mortgage payment, and extra mortgage principle payments any day you want. You can even pay with cash if you want to. No need to talk to a banker, just go right to the teller.


I don't remember for sure on the very last payment, but I think the teller gave me a payoff quote. If she didn't then I probably got the pay-off quote on line, and then took that in to the bank and paid the teller. I do remember the teller congratulating me on paying off my mortgage.

This is not entirely correct. The principal amount due on the first of the month is the same amount due at the end of the month if you don't make a payment. Interest is calculated on the amount due and does not change throughout the month (assuming you don't make a payment). The reason you can't pay extra to principal on the second of the month is because you had not yet paid the payment due for that month. Fannie and Freddie and all the other investors do not permit application of a principal only payment if the payment due for the month has not been paid. So you can pay your principal on the first of the month and extra to principal at the same time. But the payment will be applied first. Or pay the payment on the first and extra to principal on the second - again, the payment due for that month has to be applied first. Paying principal at the end of the month is no different than paying it on the second as long as the payment is paid first.

 

[Bamaman]

My mortgage was serviced by Suntrust Bank, but who knows who I owed for the mortgage. The home financing business works in mysterious ways.

I went into my local Suntrust and talked to their in house mortgage originator. She was nice enough to call elsewhere and get me the payoff, but she couldn't accept the payoff. Mortgages are kept on a bookkeeping system separate from the bank's general ledger.

I just mailed them a personal check for the payoff amount + 5 days. They cashed my personal check and later sent me the mortgage papers and released the lien. Since it was a straight payoff, time was not of the essence to me.

And yes it's nice not to owe anyone for any real estate. It's an ace in the hole to being able to retire early.

 

[OMY-Syndrome]

This is not entirely correct. The principal amount due on the first of the month is the same amount due at the end of the month if you don't make a payment. Interest is calculated on the amount due and does not change throughout the month (assuming you don't make a payment). The reason you can't pay extra to principal on the second of the month is because you had not yet paid the payment due for that month. Fannie and Freddie and all the other investors do not permit application of a principal only payment if the payment due for the month has not been paid. So you can pay your principal on the first of the month and extra to principal at the same time. But the payment will be applied first. Or pay the payment on the first and extra to principal on the second - again, the payment due for that month has to be applied first. Paying principal at the end of the month is no different than paying it on the second as long as the payment is paid first.

Actually, I was correct, because I was talking about an extra payment.

 

[MissMolly]

Actually, I was correct, because I was talking about an extra payment.

Actually, no you aren't. You pay interest based on the remaining principal balance. If you pay a payment the first day of the month, your balance is decreased by the amount applied to principal. If you pay another payment the next day, interest is calculated on that new balance. It doesn't stay the same as it was on the first of the month. Interest is always recalculated on the remaining balance each time a payment is made.