Understanding How Mortgage Payments Work

Mortgage payments aren’t as simple as making payments for a rental property, as many components make up the whole. Some of these components, such as the interest rate, also determine how long it will take to pay off your house and how much you’ll pay at the end.

Let’s take a closer look at the process to clarify how mortgage payments work.

What Are Mortgage Payments

Mortgage payments are the process of how you repay your home loan through a series of installment payments. You make these installment payments on a monthly or bi-weekly basis over a period of years.

There’s more than just the payments on your house that’s included in mortgage payments; there’s also the interest, taxes, and mortgage insurance if you had a down payment of less than 20%.

When Do Mortgage Payments Start?

Upon completing the mortgage loan process, lenders typically set your first mortgage payment to be due after the first full month after your closing date.

If you close on your house on April 10th, the closing costs you had to pay at interest would cover whatever interest you would have for the rest of the month. Then your May payment would be due on the first day of June.

How To Make Your Payments

These days, you can pay your mortgage online as you do with your other bills, but you can still make payments over the phone or through the mail if you wish. Your lender should also provide the web address where you can access your dashboard.

You may need to create a username and password to access your information, but the ease and convenience of online payments make it a more favorable option.

Since taxes and insurance rates may fluctuate every year, especially if you have an adjustable-rate mortgage (ARM), you need to check how much you need to pay to ensure that you don’t underpay.

It may also be easier to set up an automatic payment process and keep an eye on the amount withdrawn.

How Do Mortgage Payments Work?

When you first start making your mortgage payments, you have a high balance due to the interest you owe.

Due to the interest amount, most of your monthly payments go toward paying off the interest, and only a small amount goes towards paying off the principal amount of the loan, which is the price of your home.

Closer to the end of the loan, you owe less in interest, and most of your payment goes toward paying off the rest of the principal.

If you were required to have a PMI due to having a down payment of less than 20%, you no longer have to have it once your loan-to-value ratio is 80% or less, and it must be removed by law.

At Equity Mortgage, it’s our mission to offer our customers home loans with the lowest interest rates and inform them how the mortgage process works.

We work with a variety of clients who all have different mortgage needs.

If you have any questions about the mortgage process or you’re ready to start the mortgage process on your own home, contact us via our contact form or call us directly at 1-800-332-9221.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.