Profile picture for ebaybabe11

I am refinancing, and my lender wants to "pad" the payoff of my existing mortgage balance, for any

extra charges they may add to my payoff.  What amount should that padding be on a 105,882.00 balance.
  • November 22 2010 - Staten Island
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Answers (12)

I would say without knowing upfront what the pay-off is, then using the rule of thumb of adding one monthly payment to the current balance should be sufficient for the padding.  This allows the lender to start with a number, a loan amount, to correctly figure out the Good Faith Estimate for you.  Once the lender receives the correct pay-off you can either have the lender update the loan amount, or at the end of the transaction, pay the difference, or add any cash-out received to put towards reducing the principal balance at closing.  I'm sure the lender wouldn't put anymore than needed, especially if they're making sure you don't want to come in with funds to close.  
  • November 23 2010
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Some lenders charge a payoff statement fee, so the new lender will wait to order the payoff in order to avoid additional fees. 

A fair "pad" would be equal to a monthly payment. 
  • November 23 2010
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So loan officers, never order a pay off early

Have you ever heard of trigger leads? Credit is pulled at application and within minutes the servicing lender knows it.
  • November 23 2010
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Profile picture for Lmiller1955
don't pad
  • November 22 2010
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MoniqueU - I've heard other lenders echo your warning not to order the payoff early for fear of losing the loan to the servicing lender but I've never actually seen it happen.  :)

We make sure to order them for our clients ASAP so that 1)We know what the exact payoff is, so no padding is necessary, and 2)There is no delay with Underwriting or Docs waiting for the payoff statement.
  • November 22 2010
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If a lender doesn't pad your payoff on a rate/term loan, you very likely will end up short to close.

Many servicers you can get exact payoff information online, or you can call customer service for a verbal payoff.   Be careful about ordering formal payoff until you need one.  Servicers charge $30-$90 for the pleasure of telling you how much is needed to pay them in full, and some will charge for EACH formal request.

  • November 22 2010
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Profile picture for MoniqueU

If you order the pay off now. Your currently lender will get an internal memo. thus they will call you and make you a better offer on your new loan.
So by all means, order a pay off early.
If it is a chase loan, they will always call and underbid .
So loan officers, never order a pay off early(only within hours) of docs going out. unless it is a wellsfargo second- then it has to be ordered 7 days before. Unless the borrower knows how to down load of of the internet.(Most don't)

The lender trying to pad, isn't very bright.
since the only few things they can't change are :
origination fee, discount points, and transfer taxes. So if they change them, you take the original goodfaith in to the closing. everything will be lowered if they tried changing.
So they can pad as much as they want. nothing will change.
make sure your hud matches the original application minus the paded amount.Make sure you make them pick the title company. So any increases over 10% of the original goodfaith, will have to be covered by the lender.

  • November 22 2010
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I'm guessing you are at the initial stages of your refinance?  You lender won't be able to close the loan without the payoff statement from your current lender which will show exactly what's owed. When the statement is received your lender should remove the "pad" and use actual figures.

This is pretty standard - assuming they do it right.  :)
  • November 22 2010
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Have your new lender order a payoff statement. This will let your new lender know the exact amount needed to satisfy your current mortgage.  

  • November 22 2010
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Just order a payoff, most come back within the hour if not minutes.  

  • November 22 2010
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Profile picture for shapiroamg
Better than a payoff based on the balance showing on the credit report. I would think $1000 at the most over that balance is fine.
  • November 22 2010
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You have interest due from your last payment along with the recording of the discharge and posssibly some other payoff fees.  You really can't hold a new lender to fees that will be charged by your old lender.  It really is a best guess as to what your payoff figure will be.
  • November 22 2010
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