How to Calculate the Payoff Amount When Doing a Home Refinance in a Divorce
- 1). Request a copy of the most recent mortgage statement from your lender, if you don't have one already. On it you'll find the principal balance owing on the mortgage and the current interest rate. If it's a variable rate mortgage, the interest changes from month to month, so be sure you have the most recent statement.
- 2). Obtain a copy of the taxes assessed on the property for the current calendar year from the county tax assessor's office.
- 3). Fix a closing date for the refinance. To calculate the interest you'll owe on that date, multiply the current interest rate by the principal you still owe, then divide the result by 365 to get a per diem dollar amount. Multiply this amount by the number of days the refinance occurs after the first of the month. For example, if the closing occurs on the 15th of March, you owe $200,000 and the current interest rate is 4 percent, multiply 0.04 by 200,000 and divide the result by 365 to obtain a per diem interest payment of $21.92. Since your closing date is 15 days after the first of the month, you will owe $328.77 in interest.
- 4). Use a similar calculation to determine the amount of property taxes you will owe. Divide the total taxes for the year by 365 to get a per diem tax payment, then multiply that payment by the number of days after the first day of the year that the closing occurs. For example, if your tax assessment is $2,000, your per diem tax payment is $2,000 divided by 365 = $5.48. A March 15 closing date occurs 74 days after the first of the year, so you would owe $405.48 in taxes. In a leap year, you would owe $410.96.
- 5). Add the taxes and interest to the principal balance showing on your statement to get the payoff amount. You may also have to pay a prepayment penalty, depending on the terms of the loan. Read your mortgage note carefully to find if such a penalty applies, and add it to the payoff amount if it does.
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