When Do You Make Your First Mortgage Payment

Automate And Maximize Savings

When is My First Mortgage Payment Due? | Homespire Mortgage

Set up automatic transfers from your checking to savings accounts, so the money is out of reach for immediate spending.

The stock market is too volatile for short-term savings less than 10 years so when saving for a house, keep your money in a high-yield savings account, a money market account or certificates of deposit instead.

The CDs should be timed to mature just before you want to buy a house. Maximize your savings by getting the highest interest rates possible.

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How Do You Make Your First Mortgage Payment And All The Rest

Each lender has specific options available. Most accept the following payment methods:

Online payments
In-app payments

Most lenders prefer to have their clients set up autopay. With autopay, you set it and forget it. Your payment is automatically withdrawn from your bank account each month, and you dont have to stress about missing payments.

If you decide to write checks or make online payments, make sure you stay on top of your due dates. Your credit score and relationship with your lender could depend on it!

And remember, theres always the option of making your payments before their due dates. You can also add in a little extra on top of your minimum payment amount. Its a good way to shrink your loan balance faster. Just be sure to consider any prepayment fees before you start making early payments.

How Your First Mortgage Payment Affects Costs

Wondering if there is a cost to delaying your first mortgage payment? The answer is yes and no.

Regardless of when you close, and whether your first payment is due one or two months after closing, your first payment amount will be the same. What is impacted by a later first payment is your closing costs.

When your first mortgage payment gets pushed further outmeaning closer to two months after closing than oneyou’re not actually skipping a payment. You’re responsible for the loan’s interest and property taxes as soon as you close, so if your first payment is later, the interest must be prepaid and included in your closing costs.

So here’s the tradeoff: You can delay your first full mortgage payment, at the expense of paying higher closing costswhich may be preferable if you’re rolling closing costs into the loan. The timing of closing just dictates whether you’ll pay what’s owed a month after closing or at closing itself if your first mortgage payment won’t occur for two months. Both options will impact your budget, just in different ways. You may be able to negotiate the closing date if one option is better for you.

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Will My First Mortgage Payment Be Higher

In most cases, your first payment after closing will not be any higher or lower than the regular monthly payments you will be making in the future. Monthly payments on a mortgage loan are calculated off your loan amount, interest rate, and term of the loan selected. Payments are then amortized over the loan term such that each monthly payment is the same dollar amount.

One thing to note here though is that this applies only to the principal and interest portion of your loan. If you have an escrow account that includes property taxes and homeowners insurance with your regular monthly payment, you could see your mortgage payment changing whenever your taxes and insurance bills are recalculated. This often occurs on an annual basis.

Another circumstance where your initial mortgage payments could be higher is if you selected an adjustable-rate mortgage. With this type of mortgage loan, its possible that subsequent rate adjustments could result in your interest rate dropping, thus reducing your mortgage payment.

Private Mortgage Insurance Or Mortgage Insurance

Loan Amortization Schedule and Calculator

Unlike homeowners insurance that offers protection for you as the homeowner, private mortgage insurance protects the lender in the event you are unable to continue making payments on your conventional loan. PMI is typically required on loans that have a down payment of less than 20%, and can be added to your monthly mortgage payment. Mortgage insurance is required for other loan types, such as an FHA loan. Depending on the terms of your loan, PMI may be removed once you accumulate 20% equity in your home. PM and MI could be ended by refinancing to a brand new loan altogether.

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Benefit Of Collecting Interest At Close

When you close on your mortgage loan, the lender will collect all remaining days in the month in which you close. If you close on the 15th of a 31-day month, there will be 17 days of interest collected the number of days remaining in the month, including the 15th. The purpose of this is to make the first payment and all remaining payments the same amount. If the lender allowed the first payment to include those interest days, the first payment would be higher, putting the borrowers at a disadvantage right at the beginning

Prepaid Interest Costs At Closing

On your closing day, you will owe prepaid interest for the amount of time before the first full month of your new mortgage.

Going back to our earlier example to break that down: If you close on June 2, you will prepay for your mortgage interest from June 2 to 30. Then, on your first mortgage payment on August 1, you would pay the interest that accrued over that first full month of the mortgage in July.

These interest fees, along with all the other details of your loan transaction, are conveniently packaged in the closing disclosure your lender is required to provide. Prepaid interest fees are listed in the Other Costs section. Your loan officer will be your go-to resource for any concerns you might have about understanding your mortgage.

This toolkit provides an in-depth guide to understanding your home loan and more detail on the closing disclosure.

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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 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 assessors 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.

If you have to pay mortgage insurance, that premium will be included in your mortgage payment, as well.

Calculating your PITI payment can help you understand how much house you can afford, more than just considering the principal and interest amount. By adding tax and insurance into your budget, youll be closer to pinpointing a loan amount a lender may approve.

How Do I Make My First Payment

When Is My First Mortgage Payment Due?

After your loan closes, you will receive instructions by email and in writing on where to direct your first payment.

In some cases, your first payment will be made directly to us. In others, your loan may be transferred to our subservicing partner quickly enough that your first payment will go through them.

Official notification of your payment instructions will come via US mail and should arrive no fewer than 10 calendar days before your payment is due.

Why Is My First Mortgage Payment So High

Q I’ve recently taken out my first mortgage with Alliance & Leicester. My monthly payments are supposed to be £1057, but my first premium is an extra £178 – is this normal?

A Yes, it is. You make your mortgage repayments in advance, for the incoming month. But you start paying interest on your mortgage from the date the lender releases the funds, usually the day before you complete your house purchase.

Your first mortgage payment may not be due for several weeks, depending on the date you move in and your regular repayment date, but you still have to pay interest from the date funds are released.

In your case, your first payment wasn’t due until a month after you had completed, so you owed the lender interest for the month that had elapsed, plus your regular capital and interest payment for the incoming month.

Which Specific Home Features Do You Want

While its good to retain some flexibility in this list, youre making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like size and neighborhood, all the way down to smaller details like bathroom layout and a kitchen fitted with durable appliances. Scanning real estate websites can help you get a sense of the pricing and availability of properties offering the features that are most important to you.

Effect Of The Time During The Month You Close

The earlier in the month you close, the more prepaid interest you will have to pay with your closing costs. This is true no matter what your mortgage rate is. On the upside, if you close on Feb. 2, you will have a lot of time to gather your money before your first mortgage payment on April 1.

If you close your mortgage loan on Feb. 27, you will only owe prepaid interest for two days at closing, but the downside is your first mortgage payment is much closer on April 1. If you move your closing date just a couple of days forward, you will close in March. Then your mortgage payment isnt due until May 1.

How Much Money Do I Need For A Down Payment

The larger the down payment you are able to make, the less youll have to finance when you purchase a home. On a conventional mortgage, making a down payment of at least 20% will prevent you from having to pay for private mortgage insurance. The minimum down payment required varies based on the type of mortgage you obtain. In 2019, the median down payment for first-time buyers was 6%.

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Your First Mortgage Payment After Completion

Soon after you pick up the keys to your new home, youll need to make your first mortgage payment. Your lender will send you a letter to let you know how much your first mortgage payment will be and when it needs to be paid.

Your first payment will typically be higher than your standard monthly payment. This is because it will include interest for the days between the date you got your keys and moved in, and the end of that month, as well as your standard monthly payment for the month after.

To illustrate, if you move in on the 15th of January, your first mortgage payment in February will include payment for 15-31st of January as well as your standard mortgage payment for February.

How Much Is Your First Mortgage Payment

In most circumstances, your first payment amount will not vary over time. If you continue to make that same payment, it will stay the same over the course of your mortgage.

Your mortgage follows an amortization schedule. For the entire term of your loan, your mortgage lender has a schedule breaking down how much of each payment is going toward principal and how much toward interest. Your first payments are comprised of mostly paying the interest, with any extra you pay going toward the principal.

Your mortgage payment will also include paying toward an escrow account, which collects money for insurance and taxes. Other fees can be included in your payment, such as processing fees and fees for late payment.

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What Happens If I Miss A Mortgage Repayment

If you miss a mortgage repayment, a mark will be left on your . This will dent your chances of being able to borrow in the future. That mark will remain for six years.

Falling behind on your mortgage repayments can also lead to serious problems with your mortgage lender, potentially even having the property repossessed.

If you are having money issues then its really important that you speak to your mortgage lender as early as possible as they may be able to help you by switching part of the loan to an interest-only basis, reduce your payments for a short period, or extend the mortgage loan so your repayments are more manageable.

If you are having money worries, its a good idea to speak to a debt charity.

When And Where To Apply For Your Mortgage

How to make your first mortgage payment

You can meet with a mortgage lender and get pre-qualified at any time. A pre-qual simply means the lender thinks that, based on your credit score, income, and other factors, you should be able to get approved for a mortgage. Its informal and totally non-binding.

As you get closer to buying a home youll want to seek pre-approval. You can meet with a local bank, credit union, or mortgage broker. Or you can even get pre-approved online from any number of national online mortgage lenders.

Wherever you go, this pre-approval isnt binding, but its a formal indicator of your ability to get approved for a mortgage. Most sellers will want to see a pre-approval within a couple days of receiving your offer.

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What To Expect For Your First Mortgage Payment

Making payments as a homeowner has distinct differences from payments you may have made as a renter. Managing your expectations and keeping on schedule is key to making your payments on time and keeping your credit in good standing.

When is Your First Payment Due?

Your mortgage payment is typically due on the first of the month, but itâs good to confirm with your Loan Originator. Your first payment is due one full month after your closing date. For example, if you close on April third, your first 30 days of owning your home will end on May fourth. Your first mortgage payment would then be due on June first, the first of the month after your 30 days.

Whatâs Included in Your First Mortgage Payment?

Your mortgage payments include four parts: principal, interest, taxes, and insurance. Your first payments will mainly go toward interest, or the portion you pay to the lender to borrow the money.

Your mortgage payments follow an amortization schedule, which provides your lender a detailed look at what portion of each mortgage payment is dedicated to each componentâthe principal, interest, taxes, and insurance. Your first payments will mostly go toward your loanâs interest. If applicable, your payments will also pay toward an escrow account, which collects money for insurance and taxes.

How Do You Make Your First Mortgage Payment?

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