On most Richmond closing statements the biggest line is the mortgage payoff, and it is the number sellers most often misjudge. The balance on your monthly statement is not what your lender will accept to release its lien. Here is why, how the daily interest math works, and what else can land on a payoff letter when you close in the City of Richmond or Henrico County.
Your monthly statement balance is not your payoff
Your monthly statement shows unpaid principal as of the last posted payment. A payoff statement (the payoff letter) is the servicer’s written figure for everything needed to satisfy the loan in full as of a specific date: principal, interest accrued since your last payment, and any fees the loan documents allow. Your escrow balance is not subtracted; it is handled after closing.
Once you are under contract, the settlement agent requests it with your signed authorization and orders an update if the date moves. Our step-by-step walkthrough of a Richmond closing shows where that request fits in the overall timeline.
Federal law puts a clock on the servicer. Under Regulation Z, 12 CFR 1026.36(c)(3), the servicer on a loan secured by your home must send an accurate payoff statement within a reasonable time and no more than seven business days after a written request from you or someone acting for you. Exceptions cover loans in bankruptcy or foreclosure, reverse mortgages and natural disasters.
Interest is paid in arrears, so the payoff includes interest you have not been billed for
The payment you make on October 1 covers September’s interest, not October’s. So at payoff you owe interest from the date it was last paid through the payoff date, none of it billed yet. It appears on the payoff letter as accrued interest.
Skipping your last payment saves nothing: the unpaid interest rolls into the payoff, and a missed payment can trigger a late charge.
The per diem, worked out on a $300,000 balance
Payoff letters state a per diem, the daily interest amount, so the figure can be adjusted if closing shifts. Most servicers calculate it this way:
Daily interest = principal balance x annual interest rate / 365
Some servicers use a 360-day year instead. Your promissory note controls, and the payoff letter shows the servicer’s per diem, so you do not have to guess which one applies.
| Example: $300,000 balance at 6.5% | 365-day year | 360-day year |
|---|---|---|
| Annual interest ($300,000 x 0.065) | $19,500.00 | $19,500.00 |
| Per diem (annual interest / days) | $53.4247, about $53.42 | $54.1667, about $54.17 |
| 15 days of accrued interest | $801.37 | $812.50 |
| 30 days of accrued interest | $1,602.74 | $1,625.00 |
The two conventions differ by about 74 cents a day here. The bigger lesson is scale: a closing that slips one week adds about $373.97 on the 365-day basis.
The good-through date, and three reasons the number moves
Every payoff letter carries a good-through date. After it, interest keeps accruing and the servicer may require a fresh statement. Three things usually move the number:
- The closing date changes. Each extra day adds one per diem.
- The money arrives later than the signing. Interest generally runs until the servicer receives the payoff, not until you sign. A Friday closing whose wire posts on Monday can carry extra days.
- A payment posts, or does not. If you make your regular payment after the letter was issued, an updated payoff comes down. If a payment is returned, it goes up.
If the servicer ends up with more than it was owed, it sends the overage back to you.
Fees that can show up on a payoff letter
Beyond principal and accrued interest, a payoff letter can list:
- A release or recording fee for recording the release of the deed of trust.
- Statement, fax or expedited-delivery fees, where the loan documents and applicable law allow them.
- Late charges or other unpaid amounts already on the account.
- A prepayment penalty, uncommon on current residential loans; check your note.
Taxes on the deed itself are separate; see our guide to Virginia grantor tax and recordation fees at a Richmond closing.
Your escrow balance comes back after closing, not at the table
If your servicer escrows taxes and insurance, that balance usually is not credited on your closing statement. The servicer refunds it after payoff. Under Regulation X, 12 CFR 1024.34(b), a servicer must return any remaining escrow funds within 20 days, excluding legal public holidays, Saturdays and Sundays, after the loan is paid in full.
Count that refund as cash that arrives after closing, not cash available at settlement. Real estate taxes are prorated separately on the settlement statement; our companion guide to prorations on a Richmond closing statement covers who credits whom. For how the account itself works, see what escrow is and how it works in Richmond.
HELOCs, second liens and judgments
Every recorded lien has to be paid or released before the buyer’s title insurer will issue a clean policy. A home equity line of credit is revolving, so an open line can be drawn on after the payoff is issued. Expect to sign a letter instructing the lender to freeze and close the line, with a signed payoff letter reflecting closure so a release gets recorded. Stop using HELOC checks or cards once under contract. If you are using a HELOC to buy your next home first, our bridge loan and HELOC guide covers that sequence.
The title search can also turn up a second mortgage, a judgment lien docketed against you in circuit court, a mechanic’s lien from a contractor, or unpaid HOA assessments. Each needs its own payoff or release, and each comes out of your proceeds. For the full list of who customarily pays what, see our guide to closing costs in Richmond for buyers and sellers.
How the release of your deed of trust gets recorded
Wiring the payoff does not by itself clear the land records; the lender has to release the deed of trust. In Virginia that is governed by Code of Virginia 55.1-339, which defines a payoff letter as the lender’s written statement of what is required to satisfy the debt. When the settlement agent sends notice, the lien creditor must deliver a certificate of satisfaction within 90 days after receiving it, and the statute sets out what the settlement agent can do with proof of payment and the payoff letter if the lender fails to act. Keep your settlement statement and payoff letter until the release is recorded.
A worked net-proceeds example at the Richmond Metro median
Here is a simplified estimate at the August 2026 metro-wide median. Whether you are selling in Chesterfield County, Midlothian or the Fan, the structure is the same; only the inputs change.
Richmond Metro, single-family detached, August 2026 (metro-wide figures, not a neighborhood figure)
| Measure | August 2026 | Year-over-year |
|---|---|---|
| Median sold price | $450,000 | +3.7% |
| Days on market | 22 | +4.8% |
| Months of supply | 1.8 | -5.3% |
| Closed sales | 871 | -9.0% |
| Median price per square foot | [DATA NEEDED: median price per square foot, August 2026, by area] | |
Source: CVR MLS via Richmond Association of REALTORS sortable monthly statistics (August 2026 single-family table).
| Line item (illustration) | Amount |
|---|---|
| Sale price (August 2026 metro-wide median) | $450,000.00 |
| Brokerage compensation, 5.5% assumed for illustration (negotiable) | -$24,750.00 |
| Virginia grantor tax, $0.50 per $500 of price | -$450.00 |
| Other seller settlement charges, assumed (deed preparation, settlement fee, courier) | -$1,500.00 |
| Mortgage principal | -$300,000.00 |
| Accrued interest, 15 days at $53.4247 per day | -$801.37 |
| Release/recording fee on payoff letter, assumed | -$50.00 |
| Estimated proceeds at closing | $122,448.63 |
This leaves out tax and HOA prorations, any repair credits or seller concessions you agree to, and the escrow refund that arrives afterward. For a fuller list of seller expenses, see how much it costs to sell a house in Richmond in 2026. The input that moves the result most is price, so browse our recently sold properties to see what comparable homes actually closed for.
Get your price so you can estimate your net proceeds
Your payoff is fixed by your loan; your sale price is not. Request a free home valuation and we will send a price range based on recent closed sales near you, which you can drop into the table above in place of the metro median.
Still deciding when to list? Our seller services page explains how we handle pricing, preparation and the run-up to settlement, and you can meet the agents who do that work on our team page.
Start with the number you control
Before you estimate what you will net, pin down what your home will sell for. Request your free home valuation and use it with your payoff letter to build a realistic net-proceeds estimate.
Payoff questions sellers ask us
Can I get my payoff amount myself before I list?
Yes. Most servicers let you request a payoff quote online, by phone or in writing. Treat an early quote as an estimate good through a specific date; your settlement agent will order the official payoff closer to closing.
How much accrued interest will I owe if I close early in the month?
Only a few days’ worth if that month’s payment has posted. On the $300,000 at 6.5% example, two days is $106.85 and three days is $160.27 on a 365-day basis.
What happens if I owe more than the house will sell for?
The lender must be paid in full to release the deed of trust, so you either bring the shortfall to closing or negotiate a short sale, where the lender agrees in writing to accept less. Short sale approval can take weeks, so raise it before you list.
Will my automatic mortgage payment still draft after closing?
It can if you do not turn it off. Cancel autopay once your closing date is firm, but make any payment due before settlement. If a payment drafts after payoff, the servicer should return the overpayment.
When should I cancel my homeowners insurance?
After the sale closes and the deed is recorded, not before, since you carry the risk until then. The insurer then refunds any unearned premium, separate from your escrow refund.
Is the interest in my payoff tax deductible?
Interest in the payoff is mortgage interest and your servicer reports it on Form 1098. Whether it helps depends on whether you itemize, so confirm with a CPA or tax adviser.
What if the payoff letter has the wrong amount?
The settlement agent asks the servicer for a corrected statement before disbursing. An overpayment is refunded; an underpayment means the lien is not released until the shortfall is paid, and you remain responsible for it.
