You have lived in your home for eight years, and you decide it’s time for an upgrade. Throughout the course of your ownership, you have made monthly payments regarding your mortgage loan. Part of the seller’s journey is to pay off your outstanding balance, as well as any existing credit line related to the home. Each month, your statement includes the principal balance of your loan, but you might be surprised to learn that your actual closing statement balance is higher. Why?
Your monthly mortgage payment includes the principal, interest, taxes and insurance, but let’s focus on your principal and the interest. Mortgage payments are usually due on the first of each month, but this payment is made in arrears. So essentially, the amount you pay in April is paying for March.
Say your closing date is April 21, 2022. Assuming that you have made your April 1st payment, you have then paid everything owed for March. However, you haven’t paid the interest for the 21 days in April though you still owned the house. Your payoff will include those 21 days.
Title companies, including Highland Title + Escrow, may also include an additional 7-10 days of interest, but that is to your benefit. If we send your loan payoff and it is short, the bank continues to add interest to your loan until it is completely paid off. It’s a nice surprise to get some money back, but not so great if the bank doesn’t inform you that your payoff was short, and you owe the difference
At Highland Title + Escrow, we provide an ALTA Settlement Statement for buyers and sellers at your closing appointment. Each statement contains the details of every debit and credit transaction…from the price of the property to taxes to loan payoffs. We take the time to walk you through the ALTA Statement and answer any questions you may have. We want your closing to be a time of celebration and will partner with you during an extremely important day in your life.
A smooth settlement is what we want for you, and that includes no surprises regarding the numbers. When you are ready for your settlement, please contact us at 703-723-3300, or by clicking here.