When is your first payment due after you close on your mortgage. This is often an answer that gets confused. You have to take interest into account and the date as well. Our founders explain the answer in detail. Check it out!
Transcription
Paul Apostolakis 0:00
Last question we’ll do is “when is the first mortgage payment due after I close?”
Brad Weissgerber 0:05
Depends, go ahead Sal you can answer it.
Salvatore Cusumano 0:10
Yeah, I mean, it depends, right. So like, let’s say your closing date set for July 15. Right. So I think a big misconception is, is when you make your mortgage, and this is a good thing, too. When you get a pay off, you know, my balance says it’s 285. Why is my pay off 286,200? Right. And that’s because when you make your mortgage payment, you actually pay the previous month’s interest.
Paul Apostolakis 0:32
That’s every day that you’re in the house interest accrues.
Salvatore Cusumano 0:35
Yeah. So at closing in that example, where let’s say it’s a purchase, and you’re closing July 15. Right? At closing, we’re collecting 15 days of interest to get you through to August 1, your first payment isn’t until September 1 and we are collecting the month of August interest at your September one payment. When you make your October 1st payment, that’s the month of September is interest, right? So you basically can’t live a day with a mortgage without paying interest. With that being said, if let’s say you close July 2, right, you have the option to make your payment August 1, and so September 1, and in that case, we will actually credit you two days of interest. Right? At closing. Correct. But that’s pretty rare. And I don’t even really like to give that–I mean, think about all the hectic things you have going on when you move into a home right?
Brad Weissgerber 0:51
And all of a sudden you get a mortgage payment due right away. Whoa.
Salvatore Cusumano 1:35
Yeah, you get a you know, and not to mention you guys set up online or get stuff in the mail set it up online.
Paul Apostolakis 1:40
So although your payment might not be for a month. Sal, what you’re saying is just to recap, you pay that interest regardless. You either pay it at the closing table or you paid in your first payment. But regardless, you are always paying interest and you’re always paying in arrears, meaning it’s accruing, like my mortgage interest is accruing today, and on the first of the next month or the whatever–
Salvatore Cusumano 2:01
The difference is if you’re closing on a purchase your cash flow is less out of pocket because you aren’t paying that principal portion either. So from a money out of pocket standpoint. Yeah, skipping the payment will help you like if especially if things are tight, right? Yeah. Because while you’re paying the interest, you aren’t paying the principal.
Check Out the Full Episode: Omega Lending Group – Episode 155┃Inside Real Estate
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