Mortgage payments are typically due on the first day of the month. However, if you buy a new home, when is your first mortgage payment due after you close on your loan? It’s not an exact science, but knowing when to expect your first mortgage payment to come due is an important part of the home buying and home ownership process. A financial advisor may be able to help you figure out how to craft a plan around 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 that 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 have to make your first payment on your new mortgage? Your first payment will be due the first of the month 30 days after closing. For example, if you close your loan on Feb. 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 that you are skipping a payment just because your first payment comes later than expected. The lender gets their interest money because it is rolled into your closing costs. When you look at the closing statement, you will see it there as prepaid interest.
Effect of the Time During the Month You Close
The earlier in the month you close, the more prepaid interest you will have to pay with your closing costs. This is true no matter what your mortgage rate is. On the upside, if you close on Feb. 2, you will have a lot of time to gather your money before your first mortgage payment on April 1.
If you close your mortgage loan on Feb. 27, you will only owe prepaid interest for two days at closing, but the downside is your first mortgage payment is much closer on April 1. If you move your closing date just a couple of days forward, you will close in March. Then your mortgage payment isn’t due until May 1.
Mortgage Interest and Principal Payments
If you pay your mortgage a few days early, you will gradually shorten the term of your mortgage loan. The same is true if you add some 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 will also accrue interest in March prior to your first mortgage payment on April 1. The accrued interest in March is part of your mortgage payment in April. The principal payment is then paid in advance for the month of April.
Each portion of your mortgage loan payment that is paid toward the principal reduces your loan balance. In the month of May, you will then pay on a lower principal balance. At closing, you will receive an amortization schedule for your mortgage loan that shows how much of your payment goes toward interest and toward principal. You will also receive a “First Payment Letter” that gives you the details of how and where you make your first payment and future payments.
You may also have homeowner’s 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 for these items in full when they are due instead of spreading their costs over a year of mortgage loan payments.
Even though 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 a late fee. You will be considered late on the 16th of the month. You have 30 days before you are reported to the credit bureaus.
How to Pay Your Mortgage Loan Payment
There are different ways that you can make your mortgage payment. You can use the traditional method of writing a check and putting it in the mail several days in advance. Other ways to pay your mortgage payment are:
- Online – You can register for access to your lending institutions website. After you register, you can make your mortgage payment online.
- Auto-Pay – There are two ways to use auto-pay. First, set up a transfer with your financial institution from your checking account to your mortgage account. Second, call your mortgage company and ask them to set up auto-pay from your bank account to your mortgage account. You will have to give them your bank account information to use this second auto-pay option.
- Phone – Call your mortgage company and make your payment by phone. You will have to give them your bank account information.
It’s important to understand the due date of your first mortgage payment when you have a new mortgage loan so you can manage your money depending on when you are going to close. Always pay your mortgage loan payment on the due date or during the grace period. Late mortgage payments will severely hurt your credit. If you have questions about when your first payment is due, contact your lending organization.
Tips on Home Buying
- Buying a home is no easy task, and it may be a good idea to speak with a financial advisor before trying to buy. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- When it comes to buying a house, it pays to be prepared. SmartAsset has you covered with a number of free online resources to help you out. For example, trying using SmartAsset’s mortgage calculator to calculate your payment including taxes and insurance so you won’t have any surprises.
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