For new homeowners, the timing of your first mortgage payment after closing is important. You may need to manage cash flow carefully in the months after shelling out substantial sums for the down payment, closing costs and moving expenses. This is especially true if you’re also paying for renovations, new furniture or other large expenditures related to your new home.
When is my first mortgage payment due?
The due date for your first mortgage payment depends on the closing date, and it’s usually more than 30 days away. Typically, you can estimate it by adding a month to the closing date, then figure your payment will be due on the first day of the following month.
For example, if you close on your mortgage on March 12, your first payment would be due on May 1. After that, you’d owe a mortgage payment on the first of each month.
You can find the due date for your initial payment among the documents you received at closing. Look for a letter titled “First Payment Letter” that contains the details you’ll need to make the payment.
When scheduling the closing on your house, keep in mind that the earlier in the month you close, the longer a time period you’ll have to replenish cash before making the first payment.
On the other hand, scheduling your closing for later in the month means you’d pay less prepaid interest — that’s the interest that accrues in the period between your closing date and when your first mortgage payment is due.
When Ben Simiskey, a certified financial planner at Stegent Equity Advisors in Houston, bought a house recently, he considered how prepaid interest would impact his cash flow when scheduling the closing.
“I wanted to be able to preserve some cash for projects after I moved in, so I was mindful of how much cash was due at closing and when my first payment would be on my new mortgage,” says Simiskey.
He chose a date later in the month to minimize his prepaid interest due at closing.
“By closing on July 24, I only had to prepay seven days of interest,” says Simiskey. “If I had closed earlier in the month, it would’ve been more.”
What goes into your mortgage payment
Your mortgage payment includes the loan principal, interest and other items that the mortgage lender or servicer deposits into an escrow account, like taxes and homeowners insurance. The acronym PITI stands for these main components of your mortgage payment: principal, interest, taxes and insurance.
- Principal: This is the borrowed amount you need to pay back.
- Interest: This is the amount the lender charges for lending you the money.
- Taxes: These are property taxes you pay based on the assessed value of your home. You can find information on what you owe on your county assessor’s website. Your payment may go into an escrow account until due.
- Insurance: Premiums for your first year of homeowners insurance may be included in your closing costs. After that, your monthly mortgage payment may include a portion of your homeowners insurance premium that goes into the escrow account until it comes due.
Bankrate’s PITI calculator can help you estimate the impact of your mortgage payment on your monthly budget. If you have to pay mortgage insurance, that premium will be included in your mortgage payment, as well.
How to make your mortgage payments
You can choose one of many methods to pay your mortgage:
Setting up recurring ACH payments from your checking or savings account is an easy way to make mortgage payments automatically.
Sometimes, you can customize the auto-payments, whether you want to split the monthly payment into two to save on interest, pay more each month to pay off your mortgage early or sync payments with your paychecks to avoid overdrafts. Be sure to speak with your lender or servicer about what methods are permitted, and how to do them correctly, before making payments on a different schedule than the one you initially agreed to. Keep in mind that there may be a prepayment penalty, as well.
You might also be able to make a payment through the website of your mortgage lender or servicer. If you plan to pay off your house sooner, paying online can be a convenient way to make extra principal payments when you have spare cash. Again, be sure to consult with your lender before proceeding with extra payments.
If you don’t have access to a computer, you can send your monthly payment by mail using a personal check, cashier’s check or money order. Be sure to include your mortgage account number if you’re sending a paper check and allow enough time for delivery to avoid late charges.
Making a mortgage payment over the phone can be convenient, especially if you’re close to the due date and want to avoid incurring a late fee. Look on your mortgage statement to find the phone number of your lender or servicer and have your mortgage account number and bank account information handy. Be aware that there may be a convenience fee for paying your mortgage by phone.
If you’ll be late making mortgage payments
If you’ll be late making your mortgage payment, you typically have about 15 days from your payment due date as a grace period, though this varies from lender to lender. As long as you make your payment within that time, you won’t incur a penalty.
However, making a payment more than 30 days past the due date will not only earn you a late fee — which could be 3 percent to 6 percent of your payment amount — it can also harm your credit. When your lender reports a late mortgage payment to the credit reporting agencies, it stays in your credit file for seven years. Missing even a single mortgage payment can hurt your credit score, while a pattern of missed payments would damage it substantially.
If you’re struggling to make your mortgage payments, don’t delay contacting your lender about it. There’s a chance you may qualify for a loan modification, repayment plan or a temporary reduction of payments.