Learn when your first mortgage payment will be due

When Is the First Payment on a Mortgage Due?

Imagine you’ve finally found your dream home. After months of searching, you’ve signed the papers and you’re feeling that mix of excitement and relief. But then it hits you: when’s the first mortgage payment due? If you’re like most homebuyers, this isn’t something you thought about until now. Understanding when that first payment is due and what to expect, can make the transition to homeownership a lot smoother. In this post, we’ll break down the ins and outs of mortgage payments, including when they start, how they’re calculated and what you should be prepared for. By the end, you’ll know exactly when to mark your calendar and how to budget for that first payment.

Understanding Your Mortgage Payment Schedule

How Mortgage Payments Work

When you take out a mortgage, you’re essentially borrowing money from a lender to buy your home. This loan typically comes with a fixed or adjustable interest rate and is paid back over a set period, usually 15 to 30 years. Your monthly payment consists of the principal (the amount you borrowed), interest (the cost of borrowing), property taxes, homeowners insurance and possibly mortgage insurance.

Timing Your First Payment

So, when does that first payment kick in? Most lenders set the first mortgage payment to be due on the first day of the month after the first full month following your closing date. For example, if you close on your home on June 15, your first payment would likely be due on August 1. This gives you about 45 days from closing to prepare your budget.

Real-World Scenarios

Scenario 1: Mark and Jenna’s Timeline

Mark and Jenna just bought their first home for $350,000 in March. They closed on March 30, which means their first mortgage payment is due on June 1. They’ve got a fixed-rate mortgage at 4% for 30 years, which means their monthly payment is about $1,670, including principal and interest. Knowing their payment won’t start until June gives them time to set aside money, budget for their new utility bills and get settled into their new home.

Scenario 2: Carlos’ Quick Turnaround

Carlos, on the other hand, closed on his home on January 10. His lender informed him that his first payment would be due on March 1. With a loan amount of $250,000 and an interest rate of 3.5%, his monthly payment is around $1,125. Carlos hadn’t realized he’d have to start paying so soon and needed to scramble to adjust his budget. Knowing how to plan for these payments upfront can save homeowners like Carlos a lot of stress.

What to Expect in Your First Payment

Breakdown of the Payment

Your first payment will include not just principal and interest, but also property taxes and insurance. Lenders often require you to pay a portion of these costs upfront, which can be included in your monthly mortgage payment. Let’s say your mortgage payment is $1,500, but your property taxes are $300 and homeowner’s insurance is $100. Your total first payment will be $1,900.

Escrow Accounts

Many lenders set up an escrow account to manage property taxes and insurance. This means a portion of your monthly payment goes into an account that pays these bills on your behalf. It’s a good way to avoid getting hit with large bills all at once, but it’s important to understand how much is going into escrow each month.

Budgeting for Your First Mortgage Payment

Planning Ahead

When you know when your first payment is due, you can budget accordingly. Be sure to account for the full amount, including any escrow contributions. Use the time between closing and your first payment wisely to create a budget. If your monthly mortgage payment is $1,900, you might want to set aside around $475 each week to cover this cost by the time it’s due.

Building an Emergency Fund

Homeownership often comes with unexpected costs, like repairs or maintenance. It’s smart to have some savings set aside for these expenses. Ideally, aim for three to six months’ worth of mortgage payments in your emergency fund. For our previous example of a $1,900 monthly payment, that means having between $5,700 and $11,400 saved up.

Impact of Closing Costs on Your First Payment

Understanding Closing Costs

closing costs can total anywhere from 2% to 5% of your home’s purchase price. For a $350,000 home, this could range from $7,000 to $17,500. While these costs don’t directly impact your first mortgage payment, they can affect your overall budget. If you finance these costs into your mortgage, your monthly payment might be slightly higher.

Prepaid Costs

Sometimes part of your closing costs includes prepaid items, like property taxes or homeowner’s insurance. If these are paid in advance, they’ll influence your first payment, so be sure to clarify this with your lender.

Can You Pay Your First Mortgage Payment Early?

Early Payments

Yes, you can pay your first mortgage payment early, but keep in mind that it won’t change the due date. If you close on your home in June but want to make your first payment in May, that’s perfectly fine. However, it won’t count towards the following month’s payment. It might be a good way to ease your budget, but check with your lender to ensure there are no prepayment penalties.

Impact on Interest

Making an early payment can also reduce the overall interest you’ll pay over the life of the loan. Since interest is calculated based on your remaining principal balance, paying a bit early can lead to savings in the long run.

FAQs About Your First Mortgage Payment

1. When is my first mortgage payment usually due?

Your first mortgage payment is typically due on the first day of the month following the first full month after your closing date. For example, if you close on your home on April 15, your first payment will be due on June 1.

2. What happens if I miss my first payment?

Missing your first mortgage payment can lead to late fees and negatively impact your credit score. It’s best to communicate with your lender if you think you might miss a payment. They may offer options to help you avoid penalties.

3. Can my first payment change?

While your first payment is usually determined at closing, it can change if your lender adjusts the escrow amounts for insurance or property taxes. Always check with your lender before the due date for any updates.

4. How is my mortgage payment calculated?

Your mortgage payment is calculated based on several factors, including the loan amount, interest rate, loan term, property taxes and insurance. Online calculators can help you estimate your monthly payment.

5. What if I want to pay more than my monthly payment?

You can pay more than your monthly payment, which can help reduce your principal balance and save on interest. Just check with your lender to ensure there are no prepayment penalties.

Next Steps for Homeowners

Now that you know when your first mortgage payment is due, it’s time to get organized. Start by setting a budget that includes your mortgage payment and other home-related expenses. Creating a separate savings account for your mortgage can help you avoid any surprises. Also, review your loan documents to understand all the details related to your mortgage, including any escrow arrangements and closing costs.

If you want to learn more about mortgages, check out our posts on abbreviation for mortgage and are there 50-year mortgages?. Remember, knowledge is power and being informed can make your homeownership experience a lot smoother.