1. Enter your personal information and amount owed. Creating a payoff letter is essential to any loan or mortgage repayment process.Our free templates and this guide can help you get started. A letter of explanation can clarify your financial situation and get you one step closer to qualifying for a mortgage. The purpose of the letter is to describe why the borrower may not be able to make their mortgage, car loan, or other debt payments. 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. A payoff letter shows the remaining balance on your mortgage, including fees, interest, etc. Learn more about what a payoff quote is and how to request one. We want to hear from you.