When You Buy a Home, When Is the First Payment Due?

Buying a home represents a significant personal milestone. Understanding your financial obligations, especially when your first mortgage payment is due, is paramount. A clear grasp of payment timelines allows for effective budgeting and ensures a smooth transition into your new financial responsibilities. This understanding sets the foundation for managing your mortgage successfully.

Determining Your First Mortgage Payment Due Date

Your first mortgage payment is typically due on the first day of the second month following your closing date. For instance, if you finalize your home purchase in June, your initial mortgage payment would be due on August 1st. This timing provides a buffer, giving you a period without a full mortgage payment immediately after closing.

This delay occurs because mortgage payments are made “in arrears,” meaning each payment covers interest accrued during the previous month. At closing, you pay “per diem interest” or “prepaid interest,” which covers interest from your closing date through the end of that month. This prepaid interest ensures the lender is compensated for the days the loan was active in the closing month before the regular monthly billing cycle begins. For example, if you close on June 15th, you pay interest for June 15th through June 30th at closing, and your first full payment on August 1st would then cover the interest for July.

The closing date influences the amount of per diem interest due and the buffer period before your first full payment. Closing later in a month can reduce the per diem interest owed at closing, as there are fewer days between the closing date and the end of that month. Your mortgage agreement and closing documents will explicitly state your first payment due date.

Components of Your First Mortgage Payment

Your mortgage payment typically comprises four main elements: Principal, Interest, Taxes, and Insurance, commonly referred to as PITI. Understanding these parts helps clarify what your monthly payment covers.

The “Principal” is the portion of your payment that directly reduces the outstanding balance of your loan. The “Interest” is the fee charged by the lender for borrowing the money, calculated as a percentage of your principal balance. In the initial years of a mortgage, a larger portion of your payment typically goes towards interest, with a smaller amount applied to the principal.

“Taxes” refer to property taxes levied by local governments. “Insurance” primarily covers homeowner’s insurance. Many lenders collect property taxes and homeowner’s insurance premiums through an escrow account. Funds for these items are collected as part of your monthly mortgage payment and held in this account by your loan servicer, who then pays the bills on your behalf when they are due. This arrangement simplifies managing these recurring expenses.

Locating and Submitting Your Payment

After closing on your home, knowing where and how to make your first mortgage payment is a practical next step. The company you make payments to, known as the loan servicer, may not always be the original lender who originated your loan. Loan servicing involves collecting payments, managing escrow accounts, and responding to inquiries.

Your Closing Disclosure document is a valuable resource for identifying your loan servicer. If your loan is sold to a new servicer shortly after closing, both your original lender and the new servicer are required to notify you of the transfer. You will receive a “Welcome Kit” or similar notification from the new servicer, providing their contact details and instructions on how to make payments. These notifications ensure you know where to direct your payments and that the terms of your loan remain unchanged despite the servicing transfer.

Several convenient methods are available for submitting your mortgage payment. Many loan servicers offer online portals where you can set up one-time or recurring payments directly from your bank account. Direct debit (ACH) is a popular option that automatically withdraws the payment on the due date. Payments can also be made via mail using a check or money order, or by phone. Always verify any potential fees for phone payments and allow sufficient time for mailed payments to arrive before the due date.