The payoff letter
A payoff letter comes from the current lender and states how much is needed to pay the loan off on a given date, including interest to that day and any fees. It also gives wiring details and a per-day interest figure for later dates.
Payoff figures expire. If closing slips, request an updated letter.
Satisfaction or release of mortgage
After payoff, the lender signs a satisfaction, release or discharge, depending on local terms, stating that the debt is paid and the lien released. It is acknowledged before a notary and recorded in the county records. Lenders usually have a deadline set by state law to deliver it.
Without a recorded release, the old lien may still appear in a title search.
What to check after closing
Several weeks after a refinance or sale, search the county records or ask the title company to confirm the release was recorded. Keep your payoff statement and any discharge you receive. If nothing arrives, contact the old servicer and the title company. A missing release can block a future sale.
Closing an old account at the bank also requires checking for auto-payments.
Subordination agreements
When you refinance a first mortgage but have a second loan or a home equity line, the second lender may need to sign a subordination agreement agreeing to remain behind the new first mortgage. Without it, the new lender may refuse to close.
The agreement is signed by the junior lender and often acknowledged and recorded.
Where signers and notaries come in
Homeowners usually sign the new loan documents, while lenders sign satisfactions and subordinations through authorized officers. A notary acknowledges those signatures, often by a remote or mailed process. Questions about priority, amounts or who must sign belong with the title company or an attorney. Keep copies of each recorded document with your property records for future sales.
Why the releases go missing and a subordination example
After a payoff, the lender sends the satisfaction to the title company or the borrower. Mailing errors, mergers between lenders and clerical lapses can stall it. Waiting years makes the search harder, because the lender may have been acquired and its records moved.
A calendar reminder at 60 and 90 days after payoff is a simple safeguard.
A homeowner has a first mortgage and a home equity line. She wants to refinance the first loan at a lower rate. The new lender wants first position, so it asks the home equity lender to sign a subordination. Once signed and recorded, the order of liens stays workable and the refinance can close.
If you are selling, the payoff letter is ordered by the title company, usually with your permission. Sellers often discover small differences between the statement they see online and the payoff, and the extra amount is interest and fees accrued up to the payoff date. Ask for the per-day interest figure if closing may move by a few days.
Common questions
How long does a lender have to record a release?
The deadline is set by state law and varies. Ask the title company or check the current rule with the state.
Is a payoff letter the same as my statement?
No. A payoff includes interest to a specific date and fees, so it differs from a regular statement.
Do I sign a subordination agreement?
Usually the junior lender signs it. The borrower may sign a request or consent form.
This guide is general information, not legal advice. Fees and procedures change; check with the office involved or an attorney for your situation.