When Do You Make Your First Mortgage Payment on a New Home?

The excitement and anxiety of owning your new home will be followed by concerns about your financial state and payment to your bank. We hear questions like this from our clients all the time. Being mortgage brokers, we are well aware of the importance of planning your cash flow properly after the purchase of a house. Factors like loan interest rates can also have a significant impact on your payment schedule and long-term costs. So, let’s explore! 

When Is My First Mortgage Payment Due?

Your first mortgage payment will never surprise you, because generally, it will not be expected immediately after the purchase. Usually, it appears between thirty and sixty days after your closing date. When do you make your first mortgage payment? Lenders typically provide a clear timeline so you can prepare in advance.

Mortgage payments are made in arrears. In other words, when you pay the first of the month, you actually pay for the previous month. When you rent an apartment, you pay for the next month ahead. It is the opposite when it comes to a mortgage. Since the payments go this way, you have a whole month to reside in your new house before you get a regular billing cycle. Always remember to take advantage of this extra month and spend it wisely on home decorating or any repairs if needed.

Variables for Your Payment Dates

It is important to note that even though the arrears concept is common, your mortgage first payment date will still depend significantly on when exactly you close on the house. In this case, closing dates affect everything. For instance, if you close on the fifth of April, your first payment will appear on the first of June, and it will pay for the previous month, which is May.

Of course, each lender has a different timeline and grace period. We deal with dozens of lenders, that is why we always verify your payment date prior to the closing day. Even though some particular programs may influence this timeline, the general rule for almost all mortgages says that your payment will appear on the first day of the following month after two months have passed since you closed the deal.

How About Interest Payments?

If you wonder how the remaining days from the month when you close will be accounted for, your answer lies in prepaid interest. When you attend the closing appointment, you will pay interest for these days upfront. This ensures your first mortgage payment accurately covers the necessary period.

To explain it better, let us look at the same example above – you closed your deal on the fifth of April. So, you will pay interest for April from the fifth of April until April ends.

In other words, when you visit the closing meeting on the specified date, the interest payment for the remaining days of April will be included into your closing costs. Therefore, closing later in the month, your prepaid interest will decrease. However, the first mortgage payment date will come earlier too.

Partner with Us Today!

Now that you learned the basic concepts of mortgage payments and closing meetings, you should not feel stressed while buying a house. Knowing how the payment dates relate to the closing date and prepaid interest will help you to plan your budget easily. Our mortgage experts at BrickWood Mortgage are ready to assist you in structuring your loan and answering all your questions about the financing process. Contact us today to book a consultation!