When Is My First Mortgage Payment Due After Closing?

Buying a home involves understanding when your first mortgage payment is due. While the closing process handles many upfront costs, the first regular mortgage payment follows a specific schedule. Preparing for this payment ensures a smooth transition into homeownership and helps manage your finances effectively.

Calculating Your First Payment Due Date

Your first mortgage payment becomes due on the first day of the second full month following your closing date. This timing is due to how mortgage interest is calculated and paid, a concept known as “paying in arrears.” Unlike rent, which is paid at the beginning of a period, mortgage interest covers the preceding month. For instance, a payment made on October 1st covers the interest accrued during September.

At closing, you pay “prepaid interest” or “per diem interest.” This amount covers interest accrued from your closing date through the last day of that calendar month. For example, if you close on August 15th, you pay interest for August 15th through August 31st. This ensures the lender is compensated for the period the loan was active before your first full monthly payment cycle begins.

The timing of your closing date within a month significantly impacts the length of time until your first payment is due. If you close early in the month, such as on August 3rd, your prepaid interest covers August 3rd through August 31st. Your first full mortgage payment would then be due on October 1st, covering September’s interest. This provides nearly two months before the first payment.

Conversely, if you close late in the month, for example, on August 25th, you pay only a few days of prepaid interest for August. Your first full payment would still be due on October 1st, covering September’s interest, meaning you have a shorter period before your first payment. Understanding this mechanism helps in budgeting for initial homeownership expenses.

Components of Your First Mortgage Payment

Your first mortgage payment consists of four main components referred to as PITI: Principal, Interest, Taxes, and Insurance. The principal portion directly reduces your outstanding loan balance. Interest is the cost of borrowing the money. In the early years, a larger portion of your payment goes towards interest. As the loan amortizes over time, the principal portion gradually increases while the interest portion decreases.

Property taxes and homeowner’s insurance premiums are included in your monthly mortgage payment and managed through an escrow account. This specialized account is established by your mortgage lender to collect and hold funds for these expenses. Each month, a portion of your mortgage payment is deposited into this account. When property tax bills or insurance premiums become due, your lender pays them on your behalf from the escrowed funds. This system helps homeowners budget for these larger, less frequent bills by spreading the cost across monthly payments.

While most lenders require an escrow account for taxes and insurance, particularly for loans with a lower down payment, it ensures that these significant obligations are paid, protecting the lender’s interest in the property. Mortgage insurance, such as private mortgage insurance (PMI), may also be included in your PITI payment if your down payment was less than 20% of the home’s purchase price. This insurance protects the lender in case you default on the loan.

Making Your First Payment

Once your closing is complete and you understand the due date and amount, the next step is to make your first mortgage payment. Your loan servicer, which may be the original lender or a different company that purchased the servicing rights, will provide instructions. It is common for the loan servicing to be transferred to a new company shortly after closing. You should receive a welcome packet or statement from your servicer detailing how to set up your account and make payments.

To identify your loan servicer, check your monthly mortgage statement, which explicitly lists their name and contact information. If you have not yet received a statement, you can often find this information by checking the Mortgage Electronic Registration System (MERS) database online or by contacting your original lender, who can direct you to the current servicer. It is important to establish contact with your servicer promptly to avoid missing any payments.

Various methods are available for making your mortgage payment. Common options include setting up automatic payments directly from your bank account, which ensures timely payments and avoids late fees. Other methods include making payments through the servicer’s online portal, sending a check via mail, or making a payment over the phone. Reviewing your loan documents and the servicer’s welcome materials will clarify the available payment options and any preferred methods.