Escrow, Tax and First Payment Questions, Answered

When is my first mortgage payment, and who do I pay?

Your first payment date is set in your loan documents, and it is commonly the first of a month. You pay your mortgage servicer, the company that collects payments for the loan, which may not be the company you closed with.

Mortgage interest is typically paid one month in arrears, so your first payment covers the prior period of interest. Prepaid interest collected at closing covers the days between closing and that period. You can see it on page 2, section F of your Closing Disclosure.

Check your closing package for the due date and the servicer's name and payment instructions. Before you send money, make sure you know the correct servicer and how it takes payments. Servicers can change after closing, so read any transfer notice you get.

Sources: What should I do before, during, and after the mortgage closing process?, CFPB; What are prepaid interest charges?, CFPB; TILA-RESPA Integrated Disclosure FAQs, CFPB; Your Homeowner's Guide to Success, CFPB

My loan got sold. Is the letter I got real, or a scam?

It may be real, because loans and servicing rights change hands often, but verify it before you change where you pay. Call your current servicer using the number on your statement or its official website, not the number in the letter.

A real servicing transfer notice generally comes from your old servicer at least 15 days before the transfer, from the new servicer within 15 days after it, or as one combined notice at least 15 days before. A notice given at closing also counts. A new owner of your loan generally must notify you within 30 days of the transfer.

For 60 days after a transfer, an on-time payment sent to the old servicer cannot be treated as late.

• Effective date of the transfer
• Name, address, and phone number for both servicers
• Date the old servicer stops taking payments and the new one starts

Sources: Regulation X, 1024.33, Mortgage servicing transfers, CFPB; What happens if the company that I send my mortgage payments to changes?, CFPB; Regulation Z, 1026.39, Mortgage transfer disclosures, CFPB; What are mortgage loan modification scams?, CFPB

Can I skip escrow and pay my own taxes and insurance?

Sometimes, but it depends on the loan program, your lender, and your loan terms. FHA loans require escrow for taxes, insurance, and mortgage insurance premiums, so you generally cannot skip it there.

On conventional loans sold to Fannie Mae, escrow is generally required, but a lender may waive it under a written policy. The waiver cannot be based only on your loan-to-value ratio, and it cannot cover borrower-paid mortgage insurance premiums.

VA does not require lenders to set up escrow, but the lender stays responsible for making sure taxes and insurance get paid, so ask what your lender requires. Higher-priced loans generally must keep escrow for at least five years. For USDA loans, ask your lender what applies. If you do skip escrow, you pay those large bills yourself when they come due.

Sources: VA Pamphlet 26-7 Chapter 9, Legal Instruments, Liens, Escrows, VA; FHA Single Family Housing Policy Handbook 4000.1, HUD; Escrow Accounts, B2-1.5-04, Fannie Mae Selling Guide; Regulation Z, 1026.35, Higher-priced mortgage loans, CFPB; Your home loan toolkit, CFPB

Why did my escrow payment go up?

Usually because your property taxes or homeowners insurance went up, or because your account came up short. Your servicer must analyze the account every year and reset your payment for the next year.

A shortage can raise the payment twice over: once for the higher projected bills, and again to make up the gap. If the shortage is one month's escrow payment or more, the servicer may leave it alone or spread it over at least 12 months. Smaller shortages can also be collected within 30 days.

Servicers may also hold a cushion, generally limited to two months of escrow payments. Your annual escrow statement should show what changed. Compare its tax and insurance amounts to your actual bills, and send your servicer a written notice of error if the numbers look wrong.

Sources: Regulation X, 1024.17, Escrow accounts, CFPB; Mortgage Servicing FAQs, CFPB; My mortgage servicer has not responded to a notice of error, CFPB

Does a mortgage estimate include the Texas homestead exemption?

Do not assume it does. The Loan Estimate's property tax figure is meant to reflect taxable value after closing, but estimates rely on the information the lender knows, so ask whether yours assumes a homestead exemption.

The exemption is not automatic. You apply with your county appraisal district using Comptroller Form 50-114, and you do not file it with the Comptroller. The general deadline is April 30.

Your first tax bills can surprise you. The seller's homestead appraisal limit ends the tax year after the seller no longer qualifies, and your own limit does not start until the tax year after you qualify. Texas voters also raised the school district exemption in 2025, so old estimates can be off. For tax questions, check with a tax professional.

Sources: Regulation Z, 1026.37, Loan Estimate content, CFPB; Regulation Z, 1026.43, Ability to repay, CFPB; Form 50-114, Residence Homestead Exemption Application, Texas Comptroller; Property Tax Exemptions, Texas Comptroller; Appraisal and Tax Limitations, Texas Comptroller; Texas Comptroller Huffines Releases 2026-28 Statewide Taxable Property Value Estimates, Texas Comptroller

When can I file for the Texas homestead exemption after I buy?

If the seller did not get the exemption for that tax year, you can apply for the rest of the year you bought. You must apply before the first anniversary of the date you acquired the home.

If the seller did get it that year, your exemption generally starts January 1 of the next year. Applications generally run January 1 through April 30 of the year you want it. If you miss the deadline, you generally can file a late application up to two years after the delinquency date for those taxes. Disabled veterans have different late filing rules.

You must own the home and live in it as your principal residence. You generally must attach a copy of your Texas driver's license or state ID showing the home's address. File with your county appraisal district. For tax questions, check with a tax professional.

Sources: Texas Tax Code Chapter 11, Texas Legislature; Form 50-114, Residence Homestead Exemption Application, Texas Comptroller; Property Tax Exemptions, Texas Comptroller

What is mortgage insurance and how does it go away?

Mortgage insurance protects the lender, not you, if a loan defaults. How it ends depends on the loan type.

On conventional loans, you can generally ask your servicer in writing to cancel private mortgage insurance once your balance is scheduled to reach a set share of the original value, if your payment history is good. It generally ends automatically at a slightly lower scheduled balance if you are current, and by the midpoint of the loan term at the latest. The CFPB publishes the thresholds.

FHA is different. On loans from recent years, annual premiums generally last either 11 years or the full loan term, based on your loan-to-value at origination. HUD publishes the chart. VA loans have no monthly mortgage insurance, but usually carry an upfront funding fee. USDA loans have their own upfront and monthly charges.

Sources: What is mortgage insurance and how does it work?, CFPB; When can I remove private mortgage insurance (PMI) from my loan?, CFPB; Mortgagee Letter 2023-05, HUD

Do I need flood insurance in East Texas?

You need it if the home is in a FEMA Special Flood Hazard Area and you have a government-backed mortgage or a loan from a regulated lender. Being in East Texas does not decide it by itself, because the answer depends on the specific property.

Before closing, the lender must determine whether the home is in one of those areas and complete a standard hazard determination form. Those high-risk areas are generally zones starting with A or V.

Lenders can also require flood insurance outside those zones, so check your lender's terms. VA also treats a home subject to regular flooding as ineligible, even outside a mapped zone. Standard homeowners insurance generally does not cover flood damage. The requirement generally stays in place for the life of the loan, and map changes can affect it.

Sources: Eligibility, FloodSmart; Understanding Flood Risk: Real Estate, Lending or Insurance Professionals, FEMA; The National Flood Insurance Program's Mandatory Purchase Requirement, FEMA; VA Pamphlet 26-7 Chapter 12, Minimum Property Requirements, VA