Mortgage payments are usually due on the first day of the month. However, if you are buying a new home, when is your first mortgage payment due after your loan closes? It’s not an exact science, but knowing when to expect your first mortgage payment to be due is an important part of the homebuying and buying process. A financial advisor may be able to help you develop a plan for making your mortgage payments each month. If you’re looking for a financial advisor, consider using SmartAsset’s free advisor matching tool to find advisors who serve your area.
When is your first mortgage payment due?
You buy your new home and set a closing date. When can you expect to make your first payment on your new mortgage? Your first payment will be due on the first of the month 30 days after closing. For example, if you close your loan on February 15, your first mortgage payment on your new loan will fall on April 1. You will not have a payment due on March 1.
Don’t think you’re skipping a payment just because your first payment comes later than expected. The lender gets their interest money because it’s built into your closing costs. When you look at the closing statement, you will see prepaid interest there.
Effect of when in the month you close
The earlier in the month you close, the more prepaid interest you’ll have to pay with your closing costs. This is true regardless of your mortgage rate. On the other hand, if you close on February 2, you will have plenty of time to gather your money before your first mortgage payment on April 1.
If you close your mortgage on February 27, you’ll only owe prepaid interest for two days at closing, but the downside is that your first mortgage payment is much closer on April 1. If you move your closing date forward by just a few days, you will close in March. Then your mortgage payment is not due until May 1st.
Mortgage interest and principal repayments
If you pay your mortgage a few days earlier, you will gradually shorten the term of your mortgage. The same is true if you add extra money to just the principal payment each month.
Mortgage interest is paid in arrears, which means it is paid the month after it is due. The principal, however, is paid in advance. In our example, this means that your prepaid interest will be for the month of February. You’ll also accrue interest in March before your first mortgage payment on April 1. Interest accrued in March becomes part of your mortgage payment in April. The principal payment is then prepaid for the month of April.
Each part of your mortgage payment that is paid out of principal reduces your loan balance. In May, you will then pay on a lower principal balance. At closing, you will receive an amortization schedule for your mortgage showing how much of your payment is going to interest and principal. You will also receive a “first payment letter” which will tell you how and where you will make your first payment and future payments.
You can also have home insurance and property taxes included in your mortgage payment. You can often choose to pay insurance and taxes separately from your mortgage. You may find it more convenient to pay these items in full when they are due rather than spreading their costs over a year of mortgage payments.
Although most mortgage payments are due on the first of the month, most financial institutions give you a 15-day grace period. You can pay any time before the 15th of the month without incurring late fees. You will be considered late on the 16th of the month. You have 30 days before being reported to the credit bureaus.
How to pay your mortgage payment
There are different ways to make your mortgage payment. You can use the traditional method of writing a check and mailing it several days in advance. Other ways to pay your mortgage payment are:
Online — You can register for access to your lending institution’s website. After registering, you can make your mortgage payment online.
Autopay – There are two ways to use autopay. First, set up a transfer with your financial institution from your current account to your mortgage account. Second, call your mortgage company and ask them to set up automatic payment from your bank account to your mortgage account. You will need to give them your bank details to use this second automatic payment option.
Phone — Call your mortgage company and make your payment over the phone. You will need to give them your bank details.
At the end of the line
It’s important to understand when your first mortgage payment is due when you have a new mortgage so you can manage your money based on when you close. Always pay your mortgage on the due date or within the grace period. Late mortgage payments will seriously hurt your credit. If you have questions about when your first payment is due, contact your lender.
It’s not an exact science, but knowing when to expect your first mortgage payment to be due is an important part of the homebuying and buying process.