SCENARIO 5: Loan Originated Mid-Month, Start of Month Payoff

In this fifth scenario, the loan is originated on January 15 2018 and the first payment was due on February 15 2018. The borrower has made all their previous payments, including for January, February, March and April 2021. They want a payoff commencing on May 15 2021.


Quick Links

Record Payments

Click on the Record Payments worksheet.

In our example image below, you will see that all the payments are up-to-date and entered and that the Payment Due Date in Column A is shown as the 15th of the month, meaning this loan was originated mid month.

You do NOT need to accrue the payment for May 15 2021 as this is collected at Payoff. However, if you have received a payment for May 15 2021 then you would enter it.

Record Payments worksheet mid month originated loan

To create your Payoff, click on the Payoff worksheet.

In our example, the date we want the Payoff to start is May 15 2021.

We entered 5/15/21 in Cell G2.

The lower section of your Payoff Statement will now look like the example below:

Image

In our example loan, the loan is interest only and there is a balloon of $125,000.00.

No extra payments have been made to principal, so the outstanding balance is still $125,000.00.

  1. On May 15 2021, you will notice that the Payoff Amount is $125,729.17. This is because you are paying off in May and the May payment is due on the 15th of the month. The amount due is $929.17 including escrow, which is $729.17 excluding escrow. We are not collecting escrow this month as it is the Payoff month.
  2. There is $200.00 shown as Charges, as this is what was entered in Cell G4.
  3. Additional Late Charges shows zero until May 25 2021, when the Late Charge kicks in as the days before late is 10 days. This Late Charge is only for May 2021 as it relates to that payment. Any previously accrued Late Charges are included in the Payoff.
  4. The amount in escrow to be returned to the borrower. If for any reason there are amounts that are NOT to be returned to the borrower as they have been spent, then you need to close out the escrow in Record Payments. Learn more about Escrow.
  5. The Total Payoff is the Payoff Amount + Charges + Late Charge if applicable - Escrow.
On May 15 2021, the Payoff you are expecting is therefore $124,729.17.

REMEMBER: If you DO NOT want Late Charges showing in (3) above, then click on the Dropdown in Cell O25 and select 'No' and all further Late Charges for the Payoff month will be zero. For example, you agreed with your borrower the final payment would be paid at Payoff so you're not waiting for a check to clear before closing, so charging a Late Fee is not appropriate.

What do you do when you receive your Payoff?
Learn how to apply your Payoff and close off your loan.


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