The Veridian Blog

All of our no-cost loans will cover all "non-recurring" closing costs incurred by borrower in the transaction.  These are all fees that are associated with the funding of the loan.  But that doesn't mean the borrower doesn't pay anything in escrow, because they usually have to settle the "recurring" closing costs.

Recurring charges can be summed up with the short acronym “PITI”, which stands for:

Principal – including down payment of purchase price or any balance reduction in a refinance.

Interest – borrowers will more than likely pay a prorata share of interest, on a per diem basis, depending on the day of the month escrow closes (or in some cases, when the lender funds).  Thereafter, monthly interest payments are due on the 1st of every month.  Note that with 2nd mortgage purchase HELOCs, there is no interest due in escrow, and the payment dates will be based on the day of the month escrow closes.

Taxes – If escrow closes when taxes are due (1st installment – November 1, 2nd installment – February 1) then lenders will require borrowers to pay outstanding property tax in escrow.  For those of us who don’t usually pay taxes until the late date (1st installment – December 10, 2nd installment – April 10), this can be an unwelcome surprise.

Insurance – In purchases, the annual premium is due in escrow, or in refinances, during the annual renewal period.

What’s also part of typical recurring charges are HOA fees for condominiums and PUD’s, which in large part represent the home insurance portion of PITI.