When Do You Make Your First Mortgage Payment After Closing?
Your guide to the first mortgage payment after closing. Learn when it's due, what to expect, and how to make your initial home loan payment.
When you close on a new home, a common question arises regarding the timing of your first mortgage payment. It is a frequent misconception that the first payment is due immediately upon closing. However, the first payment is typically not due for a period of time after the closing date, often extending to a month or more. This delay is a standard practice within the mortgage industry, designed to align with how mortgage interest is calculated and collected.
Mortgage interest is generally paid in arrears, meaning you pay interest for the month that just passed. For instance, the interest portion of a payment made on May 1st covers the interest accrued during the month of April. This system dictates how your first payment date is established following your loan closing.
The closing date significantly influences when your first mortgage payment becomes due. If you close on a loan in the middle of a month, for example, on March 15th, you will prepay the interest that accrues from March 15th through March 31st at the closing. This prepaid interest covers the remaining days of the closing month. Consequently, your first full mortgage payment will cover the interest and principal for April, due on May 1st. This structured delay ensures that borrowers are not paying interest twice for the same period and aligns with the arrears payment method.
Understanding Your First Mortgage Payment Amount
Your mortgage payment typically comprises several components, commonly referred to as PITI: Principal, Interest, Taxes, and Insurance. Principal and interest directly reduce your loan balance and cover the cost of borrowing, respectively. Taxes refer to property taxes, and insurance includes homeowner’s insurance premiums. These tax and insurance amounts are often collected by your mortgage servicer and held in an escrow account, from which they are paid on your behalf when due.
The amount of your first mortgage payment is usually the standard monthly payment for principal and interest, plus the escrow contributions for taxes and insurance. However, the first payment may differ from subsequent payments due to adjustments made at closing. For example, the prepaid interest collected at closing ensures that the first full payment covers a complete month of interest.
At closing, your lender also collects initial escrow impounds to establish a reserve in your escrow account. These impounds ensure sufficient funds for upcoming property tax bills and insurance premiums. These amounts are factored into the overall financial picture of your loan and ensure the smooth operation of your escrow account from the outset. Your first payment statement will reflect these initial adjustments and the full breakdown of your scheduled payment.
Receiving Your Mortgage Payment Information
Following your loan closing, you will receive information about your mortgage, typically in a “welcome packet” from your mortgage servicer. This servicer may be the original lender or a different company to whom your loan was transferred. This packet contains all details necessary to make your first payment. It usually arrives within two to four weeks after closing.
The welcome packet will state your loan number, the due date for your first mortgage payment, and the amount due. It also provides instructions on how to submit your payments. Review all information in this packet carefully to ensure accuracy and understand your payment obligations. If you do not receive this packet within a reasonable timeframe after closing (three weeks), you should proactively contact your lender or servicer to obtain your loan information.
Many mortgage servicers also provide online portals where you can access your loan details. These portals allow you to view your payment history, current balance, and upcoming payment information. Setting up an online account through this portal is recommended, as it provides a convenient way to access your mortgage information and manage your payments.
Submitting Your First Mortgage Payment
Once you receive your welcome packet and confirm your loan details, you are ready to submit your first mortgage payment. There are several common and convenient methods available for making this payment. It is important to choose a method that ensures timely delivery to avoid potential late fees.
One of the most common ways to pay is through the servicer’s online portal. This involves setting up an account, linking your bank account, and then initiating a one-time payment. Many borrowers opt to set up automatic payments through the online portal for all future payments, though the first payment is often made manually to ensure everything is established. This method provides confirmation of payment submission.
Alternatively, you can mail a check or money order. If you choose this method, ensure you include the payment coupon provided in your welcome packet, or write your loan number on your check. The welcome packet will specify the mailing address. Another option for submitting your payment is over the phone, though some servicers may charge a convenience fee for this service. Regardless of the method chosen, submitting your payment by the due date is important to prevent late fees, which typically range from 4% to 5% of the overdue amount, and to maintain a positive payment history.