When you sell a house in Indiana with a mortgage, the title company pays off your loan at closing out of the sale money. It orders a payoff statement from your servicer, which counts interest through the payoff day and any fees, so it will be higher than the balance on your monthly statement. Tell the title company about any home equity line too. Whatever is left in your escrow account comes back to you after the payoff.
Thinking about selling? Call Realest at (219) 808-1520.
It’s a Sunday night in Hammond, three weeks before closing. The garage door is up and the porch light is on.
He’s at a card table between the paint cans and the moving boxes, scrolling the loan app on his phone. He reads the balance out loud and does the math on the back of an envelope.
She looks over his shoulder and asks the question that matters. Is that what we pay off, or is there more?
There’s more. Here’s what goes into the number, who orders it, and what comes back to you afterward.
Who pays off the mortgage when you sell?
You don’t send the check yourself. After you accept an offer, the title company asks you to sign an authorization so it can request payoffs on every loan tied to the house. That includes a second mortgage or a home equity line of credit.
Those loans show up as liens in the title commitment. The title company can’t give the buyer clean title until each one is paid. On closing day it pays them from your sale proceeds, and you get what’s left after the payoffs and the other costs on your settlement statement.
Have your loan number, the servicer’s name, and the last four digits of your Social Security number ready. It speeds up the first call.
Your payoff amount isn’t your balance
The Consumer Financial Protection Bureau (CFPB) says your payoff amount is what it takes to pay the loan off completely, and it isn’t the same as your current balance. It includes interest through the day the loan is paid off. It can also include fees you were charged and haven’t paid yet.
That’s why a payoff statement is good through a set date. If closing moves back a few days, the title company asks for an updated one.
Here is how the daily interest works, as an example only. On a $200,000 balance at a 6% rate, a year of interest is $12,000. Divided by 365 days, that’s about $32.88 a day. Your servicer’s statement will show your real figure and the date it runs through.
Statement balance or payoff amount: what each one counts
| Item | Monthly statement balance | Payoff statement |
|---|---|---|
| Principal you still owe | Yes | Yes |
| Interest through the payoff date | No | Yes |
| Unpaid fees on the loan | Sometimes | Yes |
| Prepayment penalty, if your note has one | No | Yes |
| Money in your escrow account | Not subtracted | Not subtracted, refunded after payoff |
Based on CFPB guidance on payoff amounts and the federal escrow refund rule.
How long does a payoff statement take?
Federal Regulation Z, 12 CFR 1026.36(c) covers this. For a loan secured by your home, the servicer must send an accurate payoff statement within a reasonable time and no more than seven business days after it gets a written request from you or someone acting for you.
The rule allows more time in a few cases, such as a loan in bankruptcy or foreclosure, a reverse mortgage, or a natural disaster. If any of those apply, tell your agent and the title company early.
Mortgage payoff timeline when you sell
| When | What happens | Source |
|---|---|---|
| Before you list | Find your loan number, servicer, and any second loan or line of credit | Your monthly statement |
| After you accept an offer | Sign the authorization so the title company can order payoffs | Title company |
| Within 7 business days of the request | Servicer sends the payoff statement | Regulation Z, 12 CFR 1026.36(c) |
| Closing day | Title company wires the payoff from your sale proceeds | Your settlement statement |
| Within 20 business days of payoff | Servicer returns any escrow balance | RESPA rule, 12 CFR 1024.34(b) |
Checked October 31, 2026. Federal rules can change.
Second mortgages and home equity lines
A home equity line of credit (HELOC) gets paid at closing too. The difference is that a line can still be drawn on after its balance hits zero.
Ask that the payoff request for the line also ask the lender to close it. Then get the closing in writing. If you took a draw recently, make sure the title company knows the number on your latest statement.
Selling one house and buying the next? Our guide to buying and selling at the same time covers how the two closings can line up.
Prepayment penalties
The CFPB says a charge for paying off early depends on your loan. Some loans carry a penalty during the first years. If yours has one, it had to be disclosed in your loan papers.
Look at your note and anything with Addendum in the title. If you find one, ask your servicer how it’s figured before you set a list price.
What comes back to you after closing
The escrow account is easy to forget. Under the federal escrow refund rule, 12 CFR 1024.34, the servicer has to return what’s left in your escrow account within 20 days of the loan being paid in full, not counting weekends and legal holidays.
Give the servicer your new address before closing so the check doesn’t chase you. Our escrow account guide explains what that account holds.
Property taxes are a separate line. Indiana taxes are paid a year behind, so the seller credits the buyer for taxes owed at closing. The property tax guide walks through why. Any seller concessions you agreed to also come out of your side of the settlement statement.
Back in Hammond
He crosses out the number on the envelope and writes “payoff letter” under it. She opens the title company’s email and signs the authorization on her phone.
The garage door comes down. They’ll have the real number by Friday.
Want a rough figure first? Ask Realest what you’d net, or read the mortgage payoff guide on Realest. Looking around nearby? See the Hammond, Munster, and Highland pages on Realest, or our Hammond homes guide.
Work with Realest
Getting ready to sell? Send us a note.
Wondering what your place would bring? Ask for your home value and we’ll pull the recent sales near you.
Call the shop at (219) 808-1520.
Pamela “Pam” Joveski is the founding owner of Realest. Realest is at 112 S. Main St., Suite B, Crown Point.
Photo by Nyttend of houses in the Indi-Illi Park neighborhood of Hammond, Indiana, April 2012, public domain, via Wikimedia Commons. Cropped, text added. Shown for illustration only. It is not a Realest listing.
Loan terms and federal rules vary and can change. This is general information, not legal or tax advice. Check with your servicer, your title company, or an attorney. The Hammond sellers are an example, not real clients.
Sources
- CFPB: What is a payoff amount and is it the same as my current balance?
- CFPB: Regulation Z, 12 CFR 1026.36, payoff statements
- eCFR: 12 CFR 1024.34, timely escrow payments and refunds
- CFPB: Can I be charged a penalty for paying off my mortgage early?
Ask Realest
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When you’re ready to talk it through, contact us or call (219) 808-1520.
FAQ
Is my mortgage balance the same as my payoff amount?
No. The Consumer Financial Protection Bureau (CFPB) says your payoff amount includes interest through the day the loan is paid off and can include unpaid fees. If your loan has a prepayment penalty, that is added too. The balance on your monthly statement leaves those out.
How long does a servicer have to send a payoff statement?
For a loan secured by your home, federal Regulation Z says the servicer must send an accurate payoff statement within a reasonable time and no more than seven business days after a written request. Your title company can make the request for you.
Do I get my escrow money back when I sell?
Yes. Federal rules say the servicer has to return what is left in your escrow account within 20 days of the loan being paid in full, not counting weekends and legal holidays. Keep your new mailing address on file with the servicer so the check finds you.
What happens to a home equity line of credit when I sell?
It gets paid off at closing like the first mortgage. Ask that the payoff request for the line also ask the lender to close it, so no one can draw on it after the payoff.
Can I be charged a penalty for paying off my mortgage early?
It depends on your loan. The CFPB says any prepayment penalty had to be disclosed in your loan papers. Look at your note and any page with Addendum in the title.
How do I talk to Realest about selling a home in Northwest Indiana?
Call the shop at (219) 808-1520 or send us a note through our contact page. We can walk through what you’d net before you list.