How Long After Closing Is a Mortgage Payment Due?
Clarify when your first mortgage payment is due after closing. This guide explains the factors influencing your initial payment timeline.
Understanding the timing of your first mortgage payment after closing is an important step in managing your financial obligations as a homeowner. This knowledge helps you prepare for the regular monthly commitments of a mortgage.
Your First Mortgage Payment Due Date
Your first mortgage payment is typically due on the first day of the second full month following your closing date. For example, if you close on your home on May 15th, your first payment will likely be due on July 1st. This is because mortgage payments are made in arrears, meaning each payment covers the interest accrued during the previous month. The payment due on July 1st would, in this scenario, cover the interest for the month of June.
The specific day of the month you close can influence the length of the gap before your first payment. If you close early in a month, such as May 3rd, your first payment due on July 1st provides a longer period before the initial obligation. Conversely, closing late in the month, for instance on May 25th, means your first payment is still due on July 1st, resulting in a shorter interval. While the first payment always covers a full month of interest for the preceding period, the time between closing and that first due date varies.
Reviewing your closing documents is important to confirm the exact due date. The promissory note specifies the precise date and amounts of your payments. This helps you understand your financial responsibilities and plan your budget.
The Role of Prepaid Interest
Prepaid interest is an amount collected at closing to cover the interest that accrues on your mortgage loan from the closing date through the end of that current calendar month. This charge ensures that the lender is compensated for the period you have the loan funds before your first full monthly payment becomes due. For instance, if you close on July 10th, you will pay prepaid interest for the days from July 10th to July 31st.
Collecting this interest upfront is standard practice. It allows your first regular monthly payment to cover interest for a complete calendar month following the closing month. For example, if prepaid interest covers July, your first payment due on September 1st will cover interest for August. This prevents a “double payment” of interest during your first full payment cycle.
This adjustment is a component of your overall closing costs. The amount of prepaid interest depends on your loan amount, interest rate, and the number of days remaining in the month after closing. This clarifies why your first mortgage payment is not due immediately after closing, as initial interest is addressed.
Receiving and Making Payments
After your mortgage closes, you will receive your first mortgage statement or payment information from your loan servicer. These statements are sent monthly and provide a comprehensive overview of your loan. Lenders are required to provide these documents for each billing cycle.
A mortgage statement details your current loan balance, the monthly payment amount, and how your payment is allocated among principal, interest, and any escrow contributions for property taxes and insurance. It also lists your payment due date and recent transaction activity. Reviewing these statements helps you track your loan’s progress and manage your finances effectively.
Various methods are available for making your mortgage payments. Many homeowners use online portals or mobile applications. Other common options include setting up automatic withdrawals from a bank account, sending payments by mail, or making payments over the phone. Auto-draft payments help ensure payments are made on time.
Most mortgage contracts include a grace period, typically ranging from 10 to 15 days, during which you can submit your payment without incurring a late fee. If a payment is made after this grace period, a late fee, often between 4% and 5% of the overdue amount, may be assessed. Payments that are 30 days or more past due are generally reported to credit bureaus, which can impact your credit score.