Find The Best Insurance
We make it easy to compare and buy insurance.LEARN MORE
Find out when you can expect to make your first mortgage payment.
When you take out a mortgage, you agree to pay back the loan with monthly payments, the amount of which is detailed on your monthly mortgage statement. Your mortgage payments are generally due on the first of each month, but most lenders will give you a grace period to complete your payment before you start incurring late fees.
But when is your first mortgage payment due?
Unlike rent payments, you don’t make your first mortgage payment in advance of owning the home. Rather, your first mortgage payment is made one month after the last day of the month you closed on the home. That means if you closed on the 20th of October, your first payment would be on the 1st of December — one month after the last day of the closing month.
But there are a few things to be aware of — such as when you close — that can affect how much you pay in closing costs.
When you close on your home, you sign a bunch of forms and pay closing costs, which include everything from attorney fees to appraisal fees to homeowners insurance and private mortgage insurance. You basically pay for everything except the loan itself.
That’s because mortgages are paid in arrears, which refer to a payment that is made at the end of a given period. Since the interest portion of your mortgage payment is based on the remaining principal balance, your lender can’t accurately calculate your monthly interest amount until after the month has ended.
If you closed on a home in October, your first mortgage payment on December 1st would be for the month of November.
You found the best mortgage. Now, find the best homeowners insurance policy.
Policygenius can help you find homeowners coverage that protects your home and valuables.
At closing, your lender will generally have you pay prepaid interest for the remaining days of the month you closed. That means if you close at the end of the month, you’ll have less prepaid interest to pay then if you close at the beginning of the month.
Your prepaid interest is the daily interest accrued multiplied by the number of days left in the month after your closing date. (Your daily interest accrued is the loan amount multiplied by the initial interest rate and divided by 365). Consider a $300,000 mortgage with a 4.5% interest rate:
If you closed on the 20th of October, you’d prepay 11 days of interest which would come out to $406.89 (11 x $36.99). If you closed on the 29th of the month, you’d pay $73.98.
If you want to pay less prepaid interest at closing, try and close at the end of the month.
However, you may find closing at the beginning of the month gives you more time to gather funds for your first mortgage payment. If you closed on October 5, for example, you’d have almost two months before your first mortgage payment was due.
Was this article helpful?
Security you can trust
Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
Copyright Policygenius © 2014-2020