Home Buying 101: When Is the First Mortgage Payment Due?
Buying a home is exciting, but don’t remain in the dark about when your first payment is due.
Contributing Writer at Tally
April 27, 2022
Many homebuyers wonder, “When is the first mortgage payment due?” Since buyers generally need to bring a lump sum of cash to the closing table to cover closing costs and other fees, this can leave your bank account a little lighter than normal.
The answer to this question can help buyers figure out how long they have to replenish their accounts.
Below, we’ll cover when the first mortgage payment is due and other important mortgage payment information.
When is the first mortgage payment due?
When you make a home purchase, the mortgage payment will be due after your closing date. The rule of thumb is the first of the month after one full month following your closing. For example, if you closed on March 3, your first payment due date would be May 1.
You can find the exact date of your first payment in the closing disclosures you sign at closing.
Mortgage payments are made in arrears, which means each monthly payment pays for previous months, not the current month.
Because mortgage payments are in arrears, the mortgage company will calculate the amount of interest you’d owe during the month you closed and collect that month’s interest upfront at the closing table.
For example, if you closed on the 15th of a 30-day month, the lender would calculate your daily interest charges, multiply them by 15 — the days remaining in the month after closing — and add this prepaid interest charge to your closing costs.
This is why it’s a good idea not to close near the first day of the month.
How much will my first mortgage payment be?
In almost every case, your first payment will be the same as all your other payments throughout the loan if it has a fixed interest rate. The only time this payment may fluctuate is for the final payment, which could be lower than your other payments.
On a variable-interest-rate mortgage, your payment will change every time the interest rate rises or falls.
What’s in a mortgage payment?
Your mortgage payment amount will include principal, interest, taxes and insurance (PITI). Here’s what each of those items mean:
Principal: This is the base amount you owe the lender. For example, if you bought a $300,000 home and put $50,000 as a down payment, your principal loan amount would be $250,000, as long as you didn’t roll closing costs into the loan. With normal payments, the principal will reduce slowly, but it drops faster as you continue through the life of the loan.
Interest: This is based on your mortgage interest rate and is the amount the lender is charging you to borrow money. In the early stages of a mortgage, interest generally makes up most of your monthly payment.
Taxes: These are the property taxes you pay on the home and are based on its assessed value. Generally, the amount you pay each month will go into an escrow account — like a savings account that bears no interest — and will be disbursed when your next property tax bill comes due.
Insurance: This pays your homeowner’s insurance premium. Like property taxes, this amount goes into an escrow account and is disbursed when your next bill comes due.
Private mortgage insurance (PMI): If you took out a mortgage with a low down payment — generally less than 20% — you may have to pay a private mortgage insurance premium every month. This policy protects the lender against loss should you default on the mortgage and go into foreclosure. In many mortgages, you only pay PMI until the loan-to-value — the principal balance on the loan relative to the home’s value — reaches a certain percent, typically 80%.
Your first monthly mortgage payment will be primarily made up of interest and escrow payments. Any remaining amount will go toward your principal.
How can I pay my mortgage?
Most mortgage lenders offer several ways to make your home loan payments. Here are common mortgage payment methods:
Check: You can always go the old-fashioned way and mail a check to the lender along with the payment stub that’s included with your monthly mortgage statement. Leave several days between the day you mail the check and your due date, so it arrives on time. Otherwise, you risk getting a late fee.
Online bill pay: If your bank offers online bill pay, you can use this in place of sending a check. In most cases, the bank will simply print a check and mail it to the lender, so make sure to include your loan number on the check’s memo line. In some cases, the bank may send the payment electronically. In these cases, your bank will ask for your loan number.
Online payment: Many mortgage companies will have a website or mobile app where you can make your monthly payments. Keep in mind that there may be a processing fee in some cases.
Phone payment: You can always call your lender with a debit card or your bank account information to make a payment. Like an online payment, there may be a payment processing fee for a phone payment.
Auto-pay: You can also set up to have your mortgage payment debited directly from your bank account on the same day of the month every month. These automatic payments generally have no extra fee, and some lenders may even offer an interest rate discount for signing up for auto-pay.
What if I am late making my mortgage payment?
Generally, mortgage companies will give you a 15-day grace period from the payment due date — this period could vary by lender. You won’t incur a late fee as long as you pay within this grace period. If you pay after the grace period, you’ll receive a late fee on your next mortgage statement.
After your payment is 30 days late, the lender can report it as late to the three major credit bureaus, and this may impact your credit score. Your payment history makes up 35% of your FICO credit score, so one 30-day-late payment can have an effect.
If you find you can’t make your mortgage payment, start by calling your lender immediately. Let your lender know about your issues and ask what assistance it has for you. Some lenders can offer you a loan modification, a reduced payment, or a repayment plan to get you back on track.
Keep your mortgage on track from the first payment
Understanding when the first mortgage payment is due will help you replenish your cash to afford the first payment. Making this first mortgage payment on time will give you a solid foundation for continued on-time payments. With on-time mortgage payments, you may be able to build a strong credit score that can help with other financial needs down the road.
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