You could close earlier in the month, but you’ll have to pay prepaid interest on the remaining days of that month. We will discuss this in more detail below.
How to make your first mortgage payment
There are several ways to make your first mortgage payment:
- Automatic payment: The mortgage company takes payment from your bank account on the same day each month, and you don’t have to worry about late payments or fees.
- Mail a check: You can use the address provided by your mortgage company.
- Drop it off: If you live near your lender’s office, your lender may allow you to deposit a payment each month.
How much will your first mortgage payment be
To find out the amount of your first mortgage payment, check your closing disclosure form. You will receive this form at least three days before closing, and it will indicate the amount of your monthly mortgage payment.
If you have a fixed rate mortgage, your first mortgage payment will be the same as each subsequent payment throughout the term of the mortgage. The only caveat is that your payment may be adjusted to account for higher property taxes or home insurance, both of which are paid from your escrow account.
If you have a variable rate loan, your first mortgage payment will be the amount shown on the closing disclosure form.
Learn more: Closing Disclosure: What It Is, How It Works, and How to Read One
What you’ll pay instead of a mortgage payment at closing
Although you will not make a mortgage payment at closing, you will be responsible for paying prepaid interest. Prepaid interest is the daily interest charged to you between the time you close and the time you make your first mortgage payment. Mortgage interest starts accumulating on your loan on closing day and does not stop accumulating until you have paid off the mortgage in full.
The amount of prepaid interest you pay depends on the day the mortgage closes. Let’s say you close on January 10th. The daily interest is multiplied by the number of days remaining in the month. In this case, you will owe 21 days of prepaid interest, from January 10 to January 31.
At closing, you may also pay:
Read more: Advice for first-time home buyers
When is a payment late?
Many mortgage companies consider a payment made after the 10th of the month to be late, and that’s when they start to tack on late fees. Although mortgage payments are due on the first of each month, most mortgage lenders offer some grace period before they start charging late fees.
What to do if you can’t make a mortgage payment
The first thing to do is contact your mortgage lender and let them know what is going on. Find out if there are any options available to you. For example, if you are in the hospital or have lost your job, see if the lender is willing to give you a mortgage forbearance for a few months.
If you’ve had your mortgage for several years and all payments are made on time, the lender may be more willing to work with you.
If you’re having trouble making the payment, your lender may be willing to:
- Lower your interest rate
- Waive their standard late fees
- Drop your private mortgage insurance (if you’ve built up enough equity)
The best mortgage lenders put customer service first, which means helping a homeowner stay on top of their monthly mortgage payment.
What to do if you want to save money in the long run
There are several options available to you to save money on your mortgage.
Pay it back early
Let’s say you have a 30 year mortgage. You can take the entire 30 years to pay off the loan in full, or you can prepay the mortgage. Paying it off early can save you thousands of dollars over the life of the loan. For example, here is the difference between paying off a $320,000 mortgage with an APR of 4.25% in 30 years and paying it off at the start of 20 years.