Managing your Mortgage Payments

Approximately 45 days after you close on a home, you’ll make mortgage payments. Because you pay interest in arrears, the interest in your payment covers the previous month. For example, if you close on May 20th, you won’t have a mortgage payment until July 1st. You’ll pay the interest that accrues from May 20th – May 31st at the closing, and your July 1st payment covers the interest from June.

Here’s everything you must know about managing your mortgage payments.

Who do you Pay?

On your closing paperwork, you’ll see who you will pay. It’s not always the lender you close with, especially if you use a broker. Many lenders use loan servicing companies to handle the payments. You’ll receive a document at closing, and preprinted coupons to tell you who you’re paying. If you aren’t sure, call the 1-800 number provided on your documents or call your loan officer.

Where does your Monthly Payment Go?

Your monthly payment covers a few things, depending on how the lender set your payment up including:


This is the portion of the amount you borrowed that you’ll pay back each month. This amount changes (increases) as you get further into the loan term.


This is the bank’s charge for borrowing the money. The larger your outstanding balance, the more interest you pay. This amount decreases as you get further into the loan.


If you include your taxes in your payment, you’ll pay 1/12th of the annual amount monthly.

Homeowners’ insurance

If you included your insurance in your payment, you’ll pay 1/12th of the annual premium monthly.

Mortgage insurance

If you put down less than 20% on the home or took out a government-backed loan, you may owe mortgage insurance monthly.

What Happens if you Miss a Mortgage Payment?

It’s important to stay on track with your mortgage payments, but if you miss one (or more), here’s what to do.

Try sticking with the same job for a couple of years to show that you’re consistent and reliable. If you do change jobs, try to stick within the same industry and/or make a vertical move, rather than lateral. Show lenders you have what it takes to succeed at your job and they’ll view you as a lower risk.
Contact your lender right away. Don’t ignore the missed payment. Let your lender know why it happened. They may have programs that can help including payment arrangement programs that spread out the missed payments over a few months.
If you continue missing payments and become more than 90 days late, the lender can put your home into pre-foreclosure, which means they’ve started the foreclosure proceedings. You have time to work your way out of this status and keep your home, but again, it’s important to talk to your lender right away to determine what they require to avoid them moving forward with the official foreclosure.

Bottom Line

Stay on track with your mortgage payments and if you can’t, talk to your lender. If you have a good payment history but struggle with your payments, you may be able to refinance to lower your payment or take advantage of mortgage forbearance if you’re experiencing temporary financial issues.