When is my first mortgage payment due?

April 9, 2019
Author: New England Home Mortgage

Negotiations.

Home inspection.

Appraisal.

Closing costs.

Closing on a new home brings many to-dos and dates to remember. You need to be organized, stay in constant communication with your mortgage broker and Realtor, and know what to expect as moving day comes closer.

You also need to budget accordingly, as the down payment and closing costs are a significant sum of money that is paid at closing. Even though you saved up and worked with a mortgage broker to set a budget for yourself, the costs of moving always bring about expenses that can tighten your budget more than expected.

Renting vs. Owning

When you rent a house, you pay monthly rent in advance. So, if you move into a new apartment on June 1, you have to pay before the move-in date and continue paying for each month in advance.

When you own a home, mortgage payments are paid in arrears, which means the payment is due after the month is over. This means that you do not pay your first mortgage payment until one month after the last day of the month you close in.

Set up your First Mortgage Payment based on Closing Day

What does this mean? Well, depending on if you close toward the start or end of a month will determine how much time you have until your first mortgage payment is due.

If you close at the end of the month, for example, March 30, your first mortgage payment will be due on May 1. If you push that mortgage payment back a few days until April 2, your first mortgage payment will not be due until June 1, almost two full months from your closing.

Prorated Interest at Closing

While closing at the beginning of the month means you have almost two months until your first mortgage payment is due, it also means you will pay a more substantial sum up front as part of your closing costs. When you close on a home, you will pay accrued interest for the day of closing through the end of the month.

Following the above example, if you close on March 30, you will pay interest for March 30 and 31 at closing. If you close on April 2, you will pay upfront interest for April 2 -30. This will be a lump sum that gets added into your closing costs.

If you are flexible with a move-in date, you can review these options to determine what will be best for your financial situation.

Do you have more questions about when your first mortgage payment is due? Contact us today.

(860) 736-2747
37 W. Center Street, Suite 208, Factory Square, Southington, CT. 06489