Short answer:
Your payoff amount is higher than your principal balance because it includes accrued interest and any applicable fees through the payoff date.
What’s happening
Principal balance is only one part of your payoff amount.
Your payoff amount may include:
- Remaining principal
- Accrued interest (added daily)
- Unpaid late fees (if applicable)
- Escrow shortages or advances
- Recording or release fees
Interest accrues every day until the loan is paid in full.
For example:
If your daily interest (per diem) is $20 per day, and your payoff date is 10 days from now:
$20 × 10 days = $200 in additional interest
This is added to your principal balance.
What it means for you
It’s completely normal for your payoff amount to be higher than your principal.
This does not mean there is an error. It reflects:
- Daily interest
- Any unpaid account charges
- Required closing or recording costs
What you should do next
- Review the valid-through date on your payoff quote
- Confirm your closing date matches the quote
- Request an updated quote if your payoff date changes
Contact us if…
- You need help understanding your per diem interest
- You believe a fee was added in error
- You need an updated payoff quote
This article is for general information only and does not change the terms of your loan.
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