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Do you have to be current on mortgage to refinance?

Does your mortgage have to be current to refinance? We want to refinance and the mortgage payoff statement shows a higher amount than our mortgage balance due to late fees and other charges we have paid in the past.

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

A lender should approve you for your refinance based on your financial profile, credit score and mortgage qualification guidelines but your new mortgage will not close until your existing mortgage balance, including any past due fees and interest, is paid in full. Prior to your refinance closing the settlement agent requests a demand payoff statement from your current lender. The demand payoff statement outlines the amount of money you owe your current lender including the outstanding mortgage balance and other past due items. You are required to payoff the amount of money listed on the demand payoff statement when your refinance closes.

It is curious to me that the amount of your current mortgage payoff is higher than your outstanding loan balance if you have already paid any late fees in the past. I would advise you to contact your current lender to understand exactly how the mortgage payoff amount is being calculated to make sure that lender is not charging you any extra fees or interest expense. There are strict rules about how late fees and interest are added to a loan balance and you want to make sure you do not pay any unnecessary expense when you payoff your existing mortgage.

Finally, we always recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as as qualification guidelines vary. Plus, comparing lenders is the best way to save money on your mortgage.

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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