First Payment

Mortgage payments are due on the 1st of the month.  However they are not considered late unless the payment is received after the 15th of the month.  And so your payment is “on time” if it’s received at any point up to the 15th.  The “June 1st” payment is not late unless it is received June 16th or later.

Most homeowners choose to setup autopay to ensure the payment is made, and that’s what I recommend, and setting up the payment to disburse on the 1st.

With autopay, if however the 1st of the month is on a weekend or holiday, the payment might get disbursed the next business day.

Ordinarily when you close on your home purchase, you will prepay interest from the day you settle through the end of the month.

If you settle on June 27th, you’ll prepay interest for June 27, 28, 29, 30, so 4 days prepaid interest.  This is the only time you pay interest in advance, as all mortgage payments pay interest in arrears.  The August 1 mortgage payment will pay July interest.

Take a close look at your closing documents to review the NOTE, as that is the document which states your first mortgage payment.  You’ll also receive a first payment letter, and payment coupons at settlement, informing you of the timing of your due dates for your mortgage payment.

You’ll additionally receive instructions by mail with all of this information, but it takes several weeks to receive these instructions.


Interest Credit

If you close in the first week of a given month, you might have the option to not prepay interest for the remainder of the month at settlement.  For instance if you close June 4, you could instead arrange to have your first payment be due July 1.  And then at settlement we’ll actually credit you for daily interest for June 1st, 2nd, and 3rd (3 days) because you didn’t borrow the money for those three days.  When you make the mortgage payment July 1, you’ll pay a full month of interest, and so the interest credit given to you at settlement accounts for the fact you didn’t borrow the money for the full month.

If you choose to do an interest credit and setup the first mortgage payment July 1, you’ll have less cash to close at settlement due.  But your first mortgage payment will be due July 1 instead of August 1.  You can alternatively choose to pay June interest at settlement and have the first mortgage payment be due August 1.

No matter what you choose, the amount of interest paid does not change, it’s just a matter of when you pay it.  If you choose to have the first payment be August 1, you’ll also expect to need to bring one more month of property tax and insurance to deposit into escrow, because you won’t be making a July 1 august payment.  Learn more:

But by making the first mortgage payment be due August 1, you do not have to make a principal payment July 1, and so it is a little bit less cash out of pocket initially.  But then at the tail end of your mortgage if you held it for the term of your loan, your loan is paid off one month later.