When are mortgage payments typically due?

Mortgage payments are typically structured to be made in arrears, meaning that the payment due is for the previous month’s interest and principal rather than for the upcoming month. For example, when a borrower makes a payment on the first of the month, that payment covers the interest accrued during the previous month.

This arrangement allows lenders to calculate the interest based on the outstanding loan balance at the end of the prior month. Understanding the timing of these payments is crucial for managing cash flow, as borrowers need to factor this into their budgeting.

In contrast, payments being due in advance or at the beginning of each month can cause confusion since they would imply paying for a future period. Quarterly payments are less common in standard residential mortgages but may be found in specific financial agreements. Thus, recognizing that mortgage payments are typically made in arrears is essential for borrowers to accurately manage their financial obligations.