Find out exactly how much it costs to pay off your mortgage today, including daily per-diem interest and any prepayment penalties.
A homeowner owes $250,000 at 6% with 20 years remaining and requests a payoff quote valid for 14 days. There is no prepayment penalty.
Per-Diem Interest: $41.10/day ($250,000 × 6% ÷ 365)
Interest Due at Payoff: $575.34 (14 days × $41.10)
Payoff Amount Today: ≈ $250,575
Monthly Payment (current schedule): ≈ $1,791
Total Remaining Interest: ≈ $179,900
Interest Saved by Paying Now: ≈ $179,300
Paying the balance today costs roughly $575 in accrued interest — and avoids nearly $180,000 of interest over the next 20 years.
The same $250,000 mortgage at 6% with 20 years left, but the borrower waits for a 30-day quote and their loan carries a 2% prepayment penalty.
Per-Diem Interest: $41.10/day
Interest Due at Payoff: $1,232.88 (30 days × $41.10)
Prepayment Penalty: $5,000 (2% × $250,000)
Payoff Amount Today: ≈ $256,233
The penalty alone adds $5,000, and the longer 30-day quote adds about $658 more in per-diem interest — roughly $5,658 more than the 14-day quote. This is why checking your loan documents for penalty terms matters before you plan a payoff.
Payoff quotes are only valid for a limited window — usually 10–30 days — because interest accrues every single day. Suppose a lender issued a quote for $250,575 thirty days ago on the $250,000 loan above.
Today the real payoff is roughly: $250,575 + (30 × $41.10) = ≈ $251,808
If you send the old amount, your loan will not be fully satisfied — you'd still owe the extra per-diem interest. Always request a fresh quote and fund your payoff before the quote expires.
A lender-style payoff quote answers one simple question: how much do I owe to pay off my mortgage today? The answer is more than the balance on your last statement — it includes interest that has accrued and will accrue through your payoff date, plus any prepayment penalty in your loan agreement.
Mortgage interest accrues daily, even though you pay monthly. Per-diem interest is your daily interest cost, calculated as balance × annual rate ÷ 365. On a $250,000 loan at 6%, that's about $41.10 per day. Over a 14-day quote window, it adds roughly $575 to your payoff — which is why payoff amounts always carry a date.
The remaining amount you borrowed, as of the statement date.
Interest that has built up since your last payment, plus per-diem interest through the payoff date.
A fee some lenders charge for paying off early — usually a percentage of the balance or a few months of interest.
Recording fees, wire fees, or per-diem for the day funds arrive. Always read the fine print.
Request an official payoff statement from your lender — never rely on your online balance alone.
Payoff quotes are usually valid 10–30 days. If you miss the date, request a new one — the amount will be higher.
Interest accrues until the lender receives your funds. Wires arrive same-day; checks can take days — plan accordingly.
Mortgage interest is often tax-deductible. Paying off early ends future deductions — factor that into your decision.
When you pay off a mortgage early, the amount you owe isn't just the principal balance on your last statement. Lenders calculate a payoff amount — the total you must send to fully satisfy the loan. It includes the outstanding principal plus interest that accrues up to the day your payment is received, along with any prepayment penalty or fees spelled out in your loan agreement.
This is why payoff quotes are always dated: they are only valid for a set window, usually 10–30 days, because interest keeps accruing every single day. If you send the balance from an expired quote, the loan will not be fully satisfied — you'd still owe the additional per-diem interest that accumulated.
Payoff quotes are typically requested when selling a home, refinancing, or paying off the loan in full. Sellers need one to know their net proceeds, refinancers need one to see how much the new loan must cover, and homeowners paying off early need one to transfer the exact amount. In every case, the quote locks in a specific dollar figure good through a stated expiration date.
Mortgage interest accrues daily even though you make monthly payments. Per-diem interest — from the Latin "per day" — is your daily interest cost, computed by dividing your annual interest by 365 days. It is the building block of every payoff quote.
Because interest accrues daily, the amount you owe grows a little every day you wait. A 14-day quote on the loan above adds about $575 in interest; a 30-day quote adds about $1,233. That's why lenders always include a payoff date on the statement — and why it pays to fund your payoff as soon as your quote is issued.
One common question is whether you pay interest through the payoff date or the date your payment is mailed. In almost all cases, interest runs through the day the lender receives your funds, which is why same-day wires are recommended over checks when timing matters.
Some loans charge a fee for paying off early, designed to compensate the lender for the interest they expected to collect. Penalties vary widely: a percentage of the outstanding balance, a set number of months of interest, or a declining schedule that phases out over the first few years of the loan. Many modern mortgages — especially conforming loans originated after 2014 — have no prepayment penalty at all.
Your mortgage note and closing disclosure will state whether a penalty exists and how it is calculated. Under the Consumer Financial Protection Bureau's rules, most residential mortgages made after January 2014 cannot include prepayment penalties at all, and any allowed penalty generally cannot exceed 2% of the remaining balance in the first two years or 1% in the third year.
Your promissory note and closing disclosure spell out any prepayment penalty — read them before you request a quote.
Many penalties shrink over time. Waiting until the penalty period ends can save thousands on a large balance.
Lenders can't enforce a penalty if it's less than 1% of the original loan amount — a small safety net in some cases.
If a penalty applies, compare the penalty cost against the interest you'd save — sometimes paying off slightly later is cheaper.
⚠️ Important Disclaimer: This Mortgage Payoff Calculator provides an estimate only. Your actual payoff quote comes from your lender and may include additional fees, recording charges, or title costs. Always check your loan documents for prepayment penalty terms, and note that paying off your mortgage may affect your mortgage interest tax deduction. This tool is for informational purposes and does not provide financial, legal, or tax advice.