Paying Off Your Private Loan: Payoff Statements, Per Diem and Title

Every short-term loan ends with a payoff. Usually that happens through a sale or a refinance, with the title company sending the money. The process is simple when you start early. It gets stressful when you start the day before closing.

Step one: request the payoff statement early

A payoff statement is the lender's official figure for what it takes to close out the loan on a given day. Request it in writing a couple of weeks before your expected closing. Your title company or closing attorney may request it for you.

Include your loan number, the property address, the name the loan is in (you or your entity) and the date you expect to pay off.

What's on the statement

• Unpaid principal
• Interest accrued through the payoff date
• Any deferred fees or points, if your loan was set up that way
• Unpaid late charges or other fees
• Release or recording fees, if any
• A per diem amount: the interest charged for each extra day past the statement date

Per diem is there because closings slip. If your sale moves out three days, title needs to add three days of interest to the wire.

Example, round numbers only. Your loan balance is $365,000 at 10% interest. Daily interest is about $100 ($365,000 × 10% ÷ 365). The payoff statement is good through the 15th. Closing moves to the 18th. Title adds about $300 to the payoff. If they don't, the loan isn't fully paid and the lien release gets delayed.

Step two: coordinate with title

Send the payoff statement to the title company or attorney handling your sale or refinance. On closing day they wire the payoff directly to the lender. Once the lender confirms receipt, it records a release, or reconveyance in deed of trust states, clearing its lien from the property. Ask your title company to confirm when that release is recorded.

A few things to watch:

• Wire instructions should come from the lender directly. Verify them by phone using a known number before any money moves, because wire fraud targets real estate closings.
• If you're doing a 1031 exchange, your qualified intermediary needs to be in the loop with title.
• On a refinance, your new lender's closing timeline needs to land before your current loan matures.

Common payoff situations

• Selling a finished flip
• Refinancing a rehab or bridge loan into a long-term DSCR (debt service coverage ratio) rental loan
• Refinancing a completed new build into permanent financing
• Selling into a 1031 exchange

Check your note for prepayment terms before you plan an early payoff. They vary by loan type. At RSC Private Lending, Bridge loans carry no prepayment penalty, while DSCR Rental loans offer prepayment options from a 5-year step-down to none.

What this means for you

Treat the payoff like any other closing task. Request the statement early, make sure title accounts for per diem, verify wire instructions, and confirm the lien release is recorded.

Planning your exit? Talk to RSC Private Lending about timing your payoff or refinancing into a DSCR rental loan. Existing borrowers can also use the Borrower Portal at homebase.rscprivatelending.com. Subject to underwriting.