A mortgage payoff letter can come in two forms. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan.Creating a payoff letter is essential to any loan or mortgage repayment process. Our free templates and this guide can help you get started. Ask for a "Good Faith. Ask for a "Good Faith. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan. A letter of explanation can be important in the mortgage underwriting and application process. Do not include a credit report as proof of payoff. Also, read about what you may need for mortgage assistance.