Mortgage Due Dates 101

September 11, 2012 42 Comments »
Mortgage Due Dates 101

If you recently took out a mortgage, or have been thinking about financing a piece of property, you may be wondering when your mortgage payments will be due each month, among other things (like how late Ikea is open).

Well, mortgage payments are generally due on the first of the month, every month, until the loan reaches maturity, or until you sell the property.

So it doesn’t actually matter when your mortgage funds – if you close on the 5th of the month or the 15th, the pesky mortgage is still due on the first.

The difference is when the first mortgage payment is due, which I’ve explained in my when mortgage payments start post.

Due on the 1st, Late on the 16th?

Most people probably know that mortgage payments are due on the 1st of the month, but many loan servicers (those who collect your payments) will allow you to pay 15 days “late” each month.

So even though your mortgage payments are technically due on the first each month, you can pay as late as the 15th every month without any kind of penalty.

This is known as the “mortgage grace period,” similar to other grace periods you see with all types of other loans.

Some “savvy” consumers may even set up automatic payments to be sent mid-month, instead of paying on the first to maximize cash flow.

But this can be a dangerous game, especially if your mortgage payment doesn’t make it to the servicer on time, for whatever reason.

Nowadays, this may be less of a problem thanks to speedy and generally reliable online payments, but it’s still a risk not worth taking.

The servicer may also harass you if you consistently pay late into the grace period.

What If I Pay My Mortgage Late?

If you play this “pay at the last minute game” each month, you could eventually get burned and wind up paying a mortgage late fee.

These fees can vary, but are often pretty steep. We’re not talking a $20 late fee and a slap on the wrist.

We’re talking a percentage of the mortgage payment, such as 5%. So if your monthly mortgage payment is $3,000 a month, that’s $150 smackers.

And if you wait too long to make a payment, it could eventually be reported to the credit bureaus, which will really hurt.

The result could be a substantial credit score ding, and more difficulty obtaining subsequent mortgages in the future.

After all, lenders aren’t too fond of homeowners who don’t make their mortgage payments on time.

What If I Pay My Mortgage Before the Due Date?

Okay, so we know paying late isn’t too smart, but what about paying the mortgage before the due date?

You might be thinking, “Hey, I can save money on interest if I make my payments on the 20th or 25th of each month, instead of the first of the next month.”

Not the case. The servicer may accept your payment on that date, but it won’t mean you’ll pay less interest.

The interest is already figured out for the month using the previous month’s balance, so it doesn’t matter if you pay a few days early.

This differs from credit cards and other types of loans, such as HELOCs, where the interest is calculated daily.

If you actually want to pay less in interest on a traditional mortgage, you need to make extra principal payments.

So if you pay an additional $100 on top of your monthly mortgage payment, your loan balance will be $100 lower for the subsequent month, and that means less interest paid over the life of the loan.

This will also reduce the loan term, meaning your mortgage will be paid off in less time.

Just note that the monthly mortgage payment will stay the same, regardless of whether you make larger payments for a few months here and there.

Tip: Be careful when making extra principal payments. If you send in a payment that is below the monthly mortgage payment, such as two smaller biweekly payments, even if they exceed the total amount due, they may not be credited properly.

All said, speak with your loan servicer once you take out your mortgage to ensure your payments are processed properly. Rules vary and it’s best to get all the answers straight from the horse’s mouth.

(photo: adactio)

42 Comments

  1. Lucas June 11, 2014 at 3:15 pm -

    I wish people would look at this! Working for a mortgage company people do not understand this concept! Thank you for the information!

  2. RandallTo May 4, 2015 at 10:22 am -

    Chase will post all money above payments for that calendar month as principal. Bank of America seem to post all extra money as the next months payment unless specified otherwise as principal.

    Having an early due date like the 1st or 2nd and banking with Chase can be tricky paying your mortgage payments around a weekly pay period. If your payment gets there on the 31st (intended for the 1st), bam, you just posted a principal-only payment and you now owe another mortgage payment the next day, or risk foreclosure proceedings to start in 30 days.

  3. Colin Robertson May 4, 2015 at 3:36 pm -

    Randall,

    Thanks for sharing that info. The takeaway is that you need to know your lender’s policy to avoid any missteps. And it’s usually wise to notify your lender if any extra payment should go toward principal.

  4. Roger June 6, 2015 at 8:37 am -

    I was with the understanding that due on the first meant it is due on the first but the lender or department store must allow 15 days before it is marked late….. I just got off the phone with Kohls and I have a late fee of 35.00 every month for the past 5 months….. I pay all my bill on the first week of the month and never had much of a problem…. Kohls is just making this because they can get extra money for nothing….

    I spend a couple of hundred dollars every other month at Kohls… NO More, their loss…. I need to find what the government rules are… do you know the site I should go too… hope so Roger Fossette

  5. Philip Kaplan June 13, 2015 at 3:25 pm -

    Conversely, can a lender subsequently change the payment date without informing a customer in writing? If they do not inform the customer in writing what steps can the customer take?

  6. Colin Robertson June 18, 2015 at 10:39 am -

    Philip,

    I would assume they would have to let you know, but I don’t know their terms or why they would change your payment due date.

  7. ronnie June 29, 2015 at 4:45 pm -

    My wife is a school teacher, no income over the summer. We pay the summer months mortgage payments ahead (conventional escrowed month to month mortgage.). I realize that there is no benefit by paying early (paying for June, July, August and September’s payments in May, but if I pay additional principle with each of these payments (+$50 with each mortgage pmt) will the additional principal added to the mortgage payment be applied to the principal balance due as of May when the payments are sent in or when each of the actual payments is actually due?

  8. ronnie June 29, 2015 at 4:57 pm -

    Also, let’s say as of May 1, 2015 I have paid my mortgage up to September 2015. I decide on July 1, 2015 to make a principal only payment of $500. Will that principal payment be applied as of the date rec’d (in July) or will it be applied when my next mortgage payment is actually due, October 1, 2015, because I paid ahead?

  9. Colin Robertson July 1, 2015 at 2:11 pm -

    Ronnie,

    No point in speculating – best to ask your servicer directly how payments will be applied. The extra principal payments are better served by being applied as soon as possible to lower interest expense in subsequent months.

  10. Chris M July 10, 2015 at 6:53 am -

    We sent in our first mortgage payment which is due on the 1st of the month. How long typically will it take for your lender/bank to cash your mortgage payment? the First payment had to be mailed in. Should I expect to see the withdrawal by the middle of the month?

  11. Colin Robertson July 10, 2015 at 11:34 am -

    Chris,

    It depends on the bank really. But it generally shouldn’t take more than a few business days after sending it.

  12. Dave B July 31, 2015 at 6:22 am -

    Thank you for the information here on “late” payments. I had looked into my loan paperwork for my mortgage and it says that I will be charged at late fee after 15 days. My question is if I pay my mortgage 6 days after its due date once will there be a mark on my credit report for it?

  13. Colin Robertson July 31, 2015 at 8:19 am -

    Dave,

    Late payments don’t generally show up on credit reports until you’re 30+ days late…

  14. ELLA September 14, 2015 at 11:14 am -

    My mortgage is with WF and as indicated in previous posts my mortgage is due on the 1st of every month and as shown on the statements received the latest I can pay my mortgage is the 16th of the month before being penalized with a late payment fee. (This is my first encounter on being late thus, my biggest concern is the affect it may have on my credit) I just ran into emergency expenses this month thus, I cannot make a payment on the 16th but will have funds 2-3 days after. Will paying my mortgage then drastically affect me?

  15. Colin Robertson September 14, 2015 at 2:59 pm -

    Ella,

    Generally paying a few days late won’t result in any credit hit (usually this takes place only after being 30 days late), but you’ll probably be subject to a late fee. It’s still good practice to pay before the grace period ends to avoid any uncertainty.

  16. Art Hunter September 29, 2015 at 8:20 am -

    My one question is “why are mortgages as a financial tool, not covered by federal guidelines whereas all lending institutions must adhere to common practices.

    Thanks

    Art

  17. Colin Robertson October 1, 2015 at 10:49 am -

    Art,

    There are federal guidelines in place now with the Ability to Pay and Qualified Mortgage rules.

  18. Debra December 24, 2015 at 4:00 pm -

    Bank of America policy can not be paid more then thirty days in advance . Just got off phone with them I have always paid a month in advance well in sept a check arrived to early which made it 32 days advanced so they applied to principal then sent statement requesting two months payments for dec and jan with a 65.00 late fee.
    I phoned had them apply to payment and not a extra principal payment as indicated on the coupon
    Now they removed the late fee and the next pmt is due February one !
    I think since the coupon clearly stated to apply to payment and the month , this is a tricky way to punish a person for paying early an adding bogus late fees ! I did get it corrected but fail to understand there math !
    I really feel like they tried to pull a scam !

  19. Debbie January 4, 2016 at 3:44 pm -

    My husband has a home. We had to get a second mortgage because taxes, how can we change banks and have them mortgage our home, also since we got married over a year ago they won’t put my name on his house why and does my credit matter. Thanks, Debbie B

  20. Colin Robertson January 6, 2016 at 11:37 am -

    Debbie,

    There’s a difference between being put on title vs. being put on the loan. If the loan is already closed you can’t be added unless you refinance the loan. A quit claim deed can get you on title.

  21. Marc February 1, 2016 at 11:28 am -

    I will pay off my mortgage next month. I still owe $4,700.00, but the Chase bank teller tells me that by April’16 I will have to pay $4,800.00 to finish paying it off. I have been paying for 20 years, so that’s 10 years early. After paying all that interest I will still owe more for paying it early? I’m confused how they came-up with that amount. Anyone have any idea how they came-out with that figure?

  22. Colin Robertson February 1, 2016 at 12:31 pm -

    Marc,

    Perhaps interest accrued during the month that is paid in arrears.

  23. wayne f February 7, 2016 at 10:49 pm -

    SWBC Mortgage generated a statement 29 January 2016. Due date is 1 Feb 2016. I received the statement 6 Feb 2016 via USPS at my home address.

    This has been a common problem for 3 months and, as well, i tick the address change box, noting the post box address but nothing changes.
    I called but they insist I tell them on the phone my full SS #. …which I am not willing to do. what is going on here?
    thanks.

  24. Colin Robertson February 8, 2016 at 11:32 am -

    Wayne,

    Not sure what you’re trying to do…change your mailing address or receive your statement earlier? In any case, you’ll have to figure out how to verify your identity with the company so you can make the required changes. Perhaps they can verify in a way other than asking for your Social.

  25. Jean Todd March 1, 2016 at 6:08 am -

    I pay on the 16th, online, and pay an extra $100. toward principal. However, I noticed on my statement that they only credit $97. to principal and the rest to current payment. Why is that?

  26. Colin Robertson March 1, 2016 at 9:46 am -

    Jean,

    Not sure, probably best to ask the servicer directly.

  27. Tanya March 1, 2016 at 4:17 pm -

    I have a question. Can my bank post my mortgage payment on the next business day and charge late fees, even though they got is on the due date?? It was paid at 3:37 PM after checking/savings accounts will not post. But this is a bill payment????

  28. Colin Robertson March 1, 2016 at 5:53 pm -

    Tanya,

    That’s probably up to your bank and whatever their policy is. This is why it’s good to leave a buffer of a few days in case the payment processing time takes longer than expected. Maybe you can ask them to waive the fee in good faith as a courtesy.

  29. brenda May 14, 2016 at 6:13 am -

    hello! I have a question. if I pay my mortgage payment 6 days after my due date, are they gonna charge me a late fee for a every single day that im late or just the 35 late fee..?

  30. Colin Robertson May 14, 2016 at 8:26 am -

    Brenda,

    Well, there’s usually a grace period, so it’s technically due on the 1st, but you can typically pay “late” until the 15th. After that you might be looking at a flat, one-time late fee, and if it goes too long (over 30 days) you get into more trouble with a late on your credit report. Best to call your actual loan servicer directly to inquire about late fees and when they’re assessed.

  31. christine May 14, 2016 at 9:55 am -

    Now last month my bank (bb&t) just give me a late change for something that happen in 2011. Is that legal?

    They took over my mortgage in 2015

  32. Colin Robertson May 15, 2016 at 3:54 pm -

    Christine,

    Hmm, you may want to check with them directly to clear that up…seems odd.

  33. Wayne May 20, 2016 at 7:48 pm -

    Thanks for the helpful advice, Colin!

    I bill pay my mortgage payment. The bank electronically makes the payment. The bank processed and confirmed payment on the 16th, but mortgage company posted payment on the 17th (1 day late and $95 fee). According to the banks policy, it processes payments at 12:00 AM and 10:00 AM PST. According to the mortgage company, payment must be received no later than 5:00 PM PST.

    My math says that the money was transferred either 17 hours or 7 hours before the 5 PM cutoff.

    Do I have a legitimate argument that I’m being penalized for the mortgage company’s delayed processing time?

  34. Colin Robertson May 23, 2016 at 8:40 am -

    Wayne,

    I’m sure you could call and ask for a refund for the late fee in “good faith,” at least just this one time if they’re at all reasonable.

  35. Victor Martin July 1, 2016 at 12:41 pm -

    Colin, thank you for all of this info.

    You mention that you don’t pay less interest if you pay your mortgage early, but do you pay more interest if you pay during the Grace period (after the 1st)?

    Thank you again for an excellent and informative article.

    Have a great holiday weekend.
    Victor

  36. Colin Robertson July 1, 2016 at 4:51 pm -

    Victor,

    You shouldn’t because the grace period essentially gives you extra time to make an on-time payment. It’s always best to ask your loan servicer directly to be sure. Have a great weekend as well, thanks!

  37. Anna July 1, 2016 at 6:47 pm -

    My daughter has had a mortgage with good payment record for 4 years. Today she realized her June mortgage payment was never made by her husband and immediately made the payment.
    She is also in the process of selling her present house and buying a new one.
    Will this late payment be on her credit report and will it hurt their chances for a mortgage on the new house they are buying?

  38. Colin Robertson July 2, 2016 at 7:53 am -

    Anna,

    Generally, payments need to be 30 days late to be reported as late on a credit report, so hopefully she is okay.

  39. Suzanne Byrne August 15, 2016 at 4:42 pm -

    Colin, please help. We have had the same mortgage company for 12 years. Last year my mother fell ill, my husband and I traveled with our 10 children to care for her and my father during Christmas. We had not realized our mortgage payment due on the 15th did not go through. We immediately paid it the first week in January and were assured by the bank it would not go on our credit score. We tried to refinance this year to make some much needed upgrades and repairs on our home, only to find it had been reported as 30 days late. After calling the bank we were told they report to the credit agencies the 3rd of each month regardless. I wrote a letter of goodwill with a denial. My question for you is, the payment was not 30 days late though it was reported as so. I am not denying we were late, but do I have a case for dispute. We have never been late in twelve years with the exception of this one incident.

  40. Bill August 22, 2016 at 5:02 pm -

    I got a home loan thru my bank 21 years ago and the payment coupons always showed the late date (first was the 15t then the 18th) plus the penalty fee. The bank sold the note to Freddie Mac long ago so now just services the account. I’ve been having problems this year and got two months behind once then have been late with the rest except once. Just received my new coupon book which doesn’t show a late payment date nor penalty for one. My loan agent always seems to be out when I call about so don’t know what to make of it. Does that mean I no longer have a grace period or are they cutting me some slack? The bank obtained an insurance policy to cover the balance of the note since my previous carrier wouldn’t renew the policy due to needed exterior repairs (bad wood, peeling paint and the roof). Since then I have taken care of the wood and paint then replaced the storm damaged shingles. I’m trying to sell the house by owner and the bank knows it. Just wondering if Freddie Mac will call in the note if I continue to make late payments since the balance is $32K and the property worth as-is to be over $130K.

  41. Colin Robertson August 22, 2016 at 7:29 pm -

    Bill,

    Probably best to ask the current loan servicer directly to clarify on due dates and grace period.

  42. Colin Robertson August 22, 2016 at 7:47 pm -

    Suzanne,

    If you feel it is being misreported you can file a dispute with the credit bureaus (Experian, Equifax, Trans Union) online. Hopefully they won’t fight it and you can get the lates cleared up.

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