When Does Your Mortgage Payment Start?

By
Mortgage and Lending with Horizon Lending Services, LLC NMLS # 198754

If you’re a new homeowner, you’re likely asking the common question: When will your first mortgage payment be? There is often a considerable gap between your closing date and your first payment. So long, sometimes, that you might actually wonder if you’ve missed it!

If you’re wondering when your first due date is coming up, you probably have a little while. Typically, you have 45 days after closing before your first payment will be due.

 

However, there are some things to consider aside from when your mortgage payment is due.

First, mortgage interest is accrued on the mortgage balance each month. In simple terms, that means you’re paying last month’s interest each time you make a payment, along with taxes, insurance, and the principal. This differs from rent, which is paid for the month ahead. For instance, paying your rent in August is covering the cost to live in the home in the month of August. Paying your mortgage in October, however, is paying the home costs for the month of September. 

Now, when it comes to actually paying your mortgage, it can get a bit tricky.

 

Your first payment date is determined by your closing date.

Let’s say you close on August 20th. Your first payment is going to be due on October 1st. But, at closing, you will need to pay the interested for the month of August (the 11 days out of the month of which you had your mortgage). If your mortgage had an interest rate of 5.5% for a balance of $300,000, your daily interest rate is $45.83. If you multiply this times 11, you get $504.17. This is known as “prepaid interest” and it comes with your closing costs.

So, if you consider this information, you aren’t “skipping” any payments or interest, although many homeowners look at it that way. You have paid the 11 days worth of interest for the month of August and all of September’s costs by the time you make your first payment in October.

 

However, you can avoid upfront and out-of-pocket expenses by closing at the very end of the month.

That’s because doing this cuts down on the prepaid interest amount that you’ll need to pay at closing, but you’ll still pay the same in the long-term. Your first mortgage payment will also be due sooner.

Closing early in the month, you’ll end up having to pay many days of prepaid interest at the time of closing. But, your first payment won’t be due for around two months. On the other hand, closing at the start of the month means you might be able to get a credit from the lender for those few days of interest and then make your first payment the following month. This is a good option if you’re looking to pay your mortgage off sooner rather than later.

 

Conclusion

In short, if you’re wondering when your first mortgage payment will be due, the answer is typically 45 days after your closing date. Depending on when you close during the month, though, your prepaid interest amount will vary, which could raise or lower your closing costs.

With the right preparation, you’ll be well on your way to paying your mortgage off successfully.

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Rainer
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Raymond Denton
Wholesale Capital Corporation - Irvine, CA
Shady Canyon Homes

You've explained it terrific, Pat and Sharon.  It'd be wonderful to see an article from you about how property tax proration works too ... your explanations are written so well.

Jan 27, 2018 10:08 AM #1
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Rainmaker
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Pat & Sharon Mistowski

Horizon Lending Services, LLC
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