When Is Your First Mortgage Payment After Closing?

Becoming a homeowner involves various financial considerations. Understanding the timing and nature of your first mortgage payment is important. Homeowners often wonder when their initial mortgage payment is due and what it includes. Comprehending its components and due date ensures a smooth transition into homeownership.

Determining Your First Payment Due Date

Your first mortgage payment due date is determined by your closing date, as interest is paid in arrears. This means your mortgage payment covers interest accrued during the previous month, not the current one. Your first payment is due on the first day of the second full month after closing. For instance, if you close on May 15th, your first full mortgage payment is due on July 1st. Interest for the remainder of May (May 15th to May 31st) is paid at closing as prepaid interest.

This payment structure ensures the lender receives interest for every day the loan is outstanding. If you close earlier in a month, you pay more prepaid interest at closing, but have a longer period before your first full mortgage payment is due. For example, if you close on June 5th, you pay prepaid interest for June 5th through June 30th at closing, and your first full payment is due on August 1st. Conversely, closing later in the month, such as on June 25th, means less prepaid interest is due at closing, but your first payment is still due on August 1st. Checking your promissory note will confirm the exact first payment due date and payment amounts.

Components of Your First Mortgage Payment

Your first mortgage payment, like subsequent ones, includes four main components, often called PITI: Principal, Interest, Taxes, and Insurance. Principal directly reduces your loan’s outstanding balance. Interest is the cost of borrowing, calculated as a percentage of your loan amount. In early years, a larger portion of your payment is allocated to interest.

Property taxes are assessed by local authorities based on your home’s value and local rates; these are often collected monthly. Homeowners insurance protects your property against covered perils like fire or theft. If your down payment was less than 20%, you may also be required to pay for private mortgage insurance (PMI), which protects the lender if you default on the loan.

Lenders often establish an escrow account to manage property taxes and insurance premiums. A portion of your monthly mortgage payment is deposited into this account. The servicer uses these funds to pay your tax and insurance bills when due. This arrangement helps homeowners budget for these larger, less frequent expenses by spreading them out monthly.

Making Your First Payment

After closing, identify your loan servicer and choose a payment method. The company that originated your loan may not be the servicer, as mortgage servicing rights are often sold. Your loan servicer is responsible for sending statements and handling the day-to-day management of your loan.

Common methods for making mortgage payments include online payments through the servicer’s website or mobile app, allowing one-time payments or automated withdrawals. Some homeowners may also mail a check or make payments over the phone. Confirm the payment due date and ensure timely submission to avoid late fees.

Key Documents and Information Sources

Several documents confirm details about your first mortgage payment. The Closing Disclosure (CD) is provided by your lender at least three business days before closing. This document outlines your mortgage loan’s final terms, including loan amount, interest rate, projected monthly payments (principal, interest, taxes, and insurance), and closing costs. Reviewing the CD allows you to verify information and address discrepancies before finalizing the loan.

After closing, you will receive a welcome packet from your loan servicer. This packet contains your new loan number, payment options, and instructions on how to set up an account. If your loan servicing is transferred, you will receive “goodbye” and “welcome” letters. These letters provide contact information for your new servicer, ensuring you know where to send payments.