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Understanding Closing Costs & your First Payment

The following article helps breakdown post-closing processes and how this impacts the borrower’s payment experience. We encourage you to share this information with your clients so they can better understand what comes next!

40% of first-time homebuyers described purchasing a new home as ‘the most stressful event in modern life.’ Unfortunately, for many borrowers, the stress doesn’t end when keys are handed over.

Many borrowers don’t understand what their closing costs covered, when their first mortgage payment is due, or how to make their payment.

“40% of first-time homebuyers described purchasing a new home as 'the most stressful event in modern life.'”

At Willow, we believe clear, proactive communications & information can drastically reduce this confusion.

Closing costs

At closing, you will pay an array of fees associated with your mortgage and new home. Importantly, some of these costs cover services that occur prior to closing, at closing, and after closing.

The diagram below breaks down the different payments you may make at closing. Please note, 3 days prior to closing you will receive a Loan Estimate summarizing what is due at closing.

Closing cost diagram

When your first payment is due

Your first mortgage payment is due on the 1st after one full month after closing. This means if you closed any time in January, whether the 1st or the 31st, your first mortgage payment will be due March 1st.

How to make your first payment

At closing, your lender may not know if they will be collecting your first payment. This is because many mortgage lenders are specialized and do not oversee the billing and collection of mortgage payments. In most cases, your lender will transfer your loan to a “mortgage servicer” after closing.

But here comes the tricky part. Depending on your loan type and when your mortgage closed, your loan may not transfer before your first payment comes due. In this case, your lender will instruct you to make a payment to them via check, phone call, or Willow’s online platform.

Keep in mind that you will receive a “notice of servicing transfer” or “goodbye letter” at least 15 days before your loan transfers to a new servicer. This means 2 weeks before your first payment is due, you will be informed by email of where to send your first payment.

Things to keep in mind

It is possible that even if a new servicer is identified, your next payment is still due to your original lender. Your notice of servicing transfer should outline this clearly. Below is a sample of how Willow’s goodbye letter informs borrowers a payment is still due to their lender.

In addition, one thing to keep in mind is that late fees cannot be applied within the first 60-days after servicing transfer. If you have trouble setting up your new account with your servicer and your payment comes due, don’t worry. Reach out to your lender or your new servicer for assistance using the information provided in your Willow portal or goodbye email.


With the Willow platform, borrower reminders and notifications are completely automated. Our comprehensive portal gives borrowers the ability to see the status of their loan, make ACH payments, and look up their new servicer information. Schedule an introductory call to learn more!


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