Thursday, October 3, 2013

Paying up is hard to do

There's no shortage of articles on the Web about getting out of debt. Some of them discuss the difficulty of paying off debt, but they generally focus on how tough it can be to cut back your expenses and free up the cash for extra loan payments. Almost none of them talk about how difficult it can be to actually make that final payment and get the bank to accept it.

That's the position we're in now. Last month, Brian and I looked over our bank statement and realized that we were actually within striking distance of being able to pay off our entire mortgage balance and wash our hands of it for good. After a bit of discussion, we couldn't think of any good reason not to do it, so I logged into my Online banking account and set up a transfer from our savings account to our mortgage loan account in the amount of the entire remaining principal. Then, in a state of nervous excitement, I clicked on "make transfer." And...it didn't go through.

Oh well, I figured, it must just be some quirk of the online banking system. Maybe it's not set up to accept a final payoff. No matter; we'll just pay off the bulk of the remaining balance this way and let the final payment come out of our account on the first of the month. So we sent a payment of $5,000, leaving a balance of less than $1,300, which we figured our next monthly payment would wipe out.

This was a miscalculation on my part. I forgot that, of the $1,500-plus we pay each month, only about $1,000 goes toward the principal. A little bit, at this point, is for interest, and the rest goes into an escrow account from which the bank pays our quarterly property taxes. So, after spending the entire day on October 1 nervously checking and re-checking our online banking to see whether than "final" mortgage payment had gone through, I found on the morning of October 2 that our mortgage loan still had a balance of two hundred dollars and change.

Well, this was such a small sum that it seemed even sillier than before to leave it just sitting there for a whole month waiting for our next regular payment to roll around. So I decided to go down to the bank in person and explain that I wanted to pay off my mortgage in full. I brought a slip of paper with me showing the number of the mortgage loan, the remaining balance, and the number of the account I wanted to take the funds from. I figured that would be all I'd need to pay the loan and be done with it.

Ha, silly me. When I spoke to the man at the bank, he told me that the balance on the paper still wasn't the amount I needed to pay; I needed to get the "closeout amount," which would include that balance plus whatever trivial sum still had to go toward interest and escrow, so that the bank's books would balance exactly when the loan was paid off. And of course, I couldn't get that number from him; I had to call up the loan servicing department. He gave me a phone number and told me to call them, request the number, and then come back the next day to complete the payoff.

Well, I called the number, and it turned out that it wasn't the loan servicing department; instead it was the bank's main customer service number. After negotiating my way through the automated service maze, I finally reached a customer service representative and explained to her what I needed. She put me on hold for about ten minutes and then came back saying that I would have to contact the loan servicing department directly—which was what I was trying to do in the first place—and fax them an official "payoff request," including my name, the number of my loan, and the desired date on which I wanted to pay it off. Then they would, supposedly, get back to me with the payoff amount, and then I could, supposedly, take that number to the bank and make the actual payment.

So at this point, I'm stuck in limbo. I faxed my payoff request to the number she gave me, but I have no way of knowing, first of all, whether it was even the right number for loan servicing (which doesn't seem certain, considering that the bank has already given me the wrong contact information once)...and second, if it is the right number, whether the folks there will bother to respond to my faxed request...and third, how long it will take them to do so. It's possible I could wait around for another week and then get a letter from them on October 10 saying, "Okay, here's the number you need to close out your account on October 3," which will, at that point, be a useless piece of information. Right now, it looks like waiting for our next scheduled payment on November 1 might actually be faster, and would certainly be easier, than trying to get the bank to tell us how to pay off the trivial amount that we still owe.

I never thought the hardest part of paying off our mortgage early would be getting the bank to take our money.
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