A payoff is a dated quote, not a balance
A payoff letter is good through a specific date. Past that date the amount changes by the per diem — which is why the daily figure is the most scrutinized number on the page and the one a borrower's closing agent will check first. Quote it wrong and the wire comes in short; quote the good-through date loosely and you argue about a few hundred dollars at the closing table.
What a payoff itemizes
- Outstanding principal.
- Accrued interest to the good-through date, on the loan's stored day-count basis.
- Reserve credit, if a funded reserve offsets the payoff.
- Fees — exit, extension, or late — per the documents.
- The per diem for each day past the good-through date.
A worked example
Take Maple Street Rehab (LN-1042): $400,000 at 12.00%, Actual/365, with a funded reserve and a 1.00% exit fee. Sixteen days of accrued interest and the reserve credit produce:
| Line | Amount |
|---|---|
| Principal | $400,000.00 |
| Accrued interest (16 days) | $2,104.11 |
| Reserve credit | −$3,150.00 |
| Exit fee (1.00%) | $4,000.00 |
| Total payoff | $402,954.11 |
The per diem is the number that keeps this quote honest after the good-through date:
Calculation
$400,000 × 12% ÷ 365 = $131.51 / day
Why the basis has to match the note
If the note is Actual/365 and the payoff is computed on Actual/360, the per diem is $133.33 instead of $131.51 — $1.82 a day off, compounding every day the closing slips. Over a ten-day delay that is about $18, and the borrower's attorney will find it. The payoff must use the same basis the loan accrued on all along.
$131.51 / day
The per diem on Maple Street ($400,000 at 12.00%, Actual/365). On Actual/360 it would be $133.33 — $1.82 a day off, compounding every day the closing slips.
Good-through dates and recomputing
If the closing moves, do not hand-edit the old letter. Reissue a new payoff good through the new date, adding the per diem for each additional day: a five-day slip on Maple adds 5 × $131.51 = $657.55. Because the letter is a dated quote, a fresh date means a fresh, itemized letter.
Preserve the payoff record
A saved payoff is an immutable record. The loan drops out of your active count when it pays off, but its payoff letter, its final interest, and its reserve settlement stay in the book and in the year-end record. Reissue to change a date; never overwrite a payoff you already sent.
Where LoanConsole fits
LoanConsole generates a payoff letter with an itemized payout and a per-diem on the loan's stored basis, and preserves the saved payoff as an immutable record.
Note
This article is operational guidance, not legal, tax, or accounting advice.