How the estimate works
- Per diem = unpaid principal × annual rate ÷ 365 (or 360, depending on how your servicer counts days).
- Interest days = days from the day after interest is paid through, up to and including the day the servicer receives your funds.
- Estimated payoff = principal + per diem × interest days + fees − credits.
The escrow balance is shown separately because servicers usually refund it after payoff rather than subtract it.
Worked example
A loan with $248,316.42 of unpaid principal at 6.25% has interest paid through October 31, 2026. The seller closes and the servicer receives funds on November 24, 2026.
- Per diem: $248,316.42 × 0.0625 ÷ 365 = $42.52
- Interest: 24 days × $42.52 = $1,020.48
- Payoff: $248,316.42 + $1,020.48 + $35.00 recording fee − $150.00 unapplied funds = $249,221.90
On an Actual/360 basis, the same loan’s per diem would be $43.11. That small difference is one reason your estimate and the official quote may not match to the penny. Every line of this example is explained in the annotated payoff statement example.
Turn the estimate into an official payoff
Payoff statements come with a good-through date, and the total is valid only if funds arrive by then. To get one:
- Look up your servicer in the mortgage company directory. For example, Rocket Mortgage (which now services former Mr. Cooper loans) generates quotes by phone, and Pennymac uses an online Payoff Resource Center.
- Ask for a good-through date that covers your closing date plus a cushion. If you need to request it in writing or have your title company receive it, use the payoff request letter template.
- Allow time. Federal rules give servicers up to seven business days after a written request (12 CFR 1026.36(c)(3)), and some ask for more lead time. BSI Financial, for example, asks for five business days.
Estimates are for planning only and aren’t financial advice. Adjustable-rate loans, reverse mortgages, loans in default and loans with daily simple interest may be calculated differently.