Congratulations! You’ve closed on the purchase of your Minnesota home. It might feel like it’s been a long road but now that you’ve moved in, you will know that it was all worth it. Let’s take a look at how your monthly payments will work.

Buying a Home In Minnesota Step 8:  First Monthly Payment and Beyond

Welcome Package

Watch your mail for a welcome package from your loan servicer, the company that is going to collect your monthly payments. In this package you will get instructions for how to make your monthly payments, including instructions for how to make automatic payment drafts from your checking or savings account. I like to suggest that you opt for the automatic payment provision since your house payment is the most important part of your credit.

Mortgage Payment Due Dates

Mortgage payments are always due on the first day of every month. There is a grace period of 15 days so if your payment does not arrive specifically on the first day your payment is not considered late. Mortgage payments are made in arrears meaning that you are paying for the interest that has accrued over the previous month. For example, your June 1^st payment is for the interest that has accrued over the month of May.

Escrow Analysis

Every year your loan servicer will receive bills from the county taxing authority as well as from your insurance company. They will analyze the amount of escrows being collected in each monthly payment to determine if they are collecting the right amount for taxes and insurance. As a result you can expect your monthly payment to change every year due to the changes in taxes, home insurance, and mortgage insurance.

Payment changes occur even if you have a fixed rate loan due to the variances in property taxes and homeowner’s insurance every year. In the case of a fixed rate loan rest assured that your principle and interest payments will stay the same every month but you should understand that your payment can vary as a result of the escrows portion of your payment.

Property tax bills

Every year you will also receive a copy of your property tax and insurance bills whether or not you are escrowing for these items. These bills are notifications to you that you want to keep for when you fill out your federal income taxes.

Mortgage Payments and Credit

Perhaps the most important factor on your credit report is the payment history of your monthly mortgage payments. When a mortgage company reports to the credit bureau that your payment has been made more than 30 days past the due date, your late payment becomes part of your permanent credit report. It can have a very negative impact on your credit report so always make sure to make your monthly mortgage payments on time.

So here you are…a homeowner. You’ve achieved the American Dream. From the days you wondered if it would ever be possible until now must have seemed like forever! There are few things in life however that can fill a person with such pride as buying their first home.

I hope that you’ve enjoyed this series of articles on how to buy your first home. Are you ready to make the first step of getting preapproved for home financing? You can start online with by entering your loan application information or you can simply call me at 651-491-5381. I look forward to hearing from you!