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PRE-PAIDS and ESCROWS
The Pre-payable adjustments are not considered closing costs.
PER DIEM INTEREST
As a result of there being no mortgage payment due for the first month following your closing, you must pay simple interest covering the period from the day of the closing through the end of the month at the closing .
PROPERTY TAX & HOMEOWNERS INSURANCE ESCROWS
A calculation will be done at the closing to determine the amount of money needed to be initially deposited to your escrow account. The actual amount will depend on the dollar amount and timing of the first property tax and homeowners insurance payment coming due. Bank will need to make certain that there will be sufficient funds in account to make this first payment. Generally speaking, you can expect this amount to range anywhere from 2 to 6 months worth of payments. Note that any fund remaining in your escrow account with the previous lender will be refunded directly to you (usually within two weeks of the closing). So for 0 point/0 closing cost refinance loan, escrows is needed to manage cash flow involved in the process.
Note: For purchases, your lender's title insurance will be covered in the closing costs but your owner's title insurance will not be covered. Owner's title insurance is optional though strongly suggested.