The buyer must pay a "Per Diem" (per day) interest on the new loan from the date of settlement to the end of the month in which the loan closes. Keep in mind that interest is paid in arrears. For example, if you close on June 25, and the buyer's first mortgage payment is due August 1, the interest includes that owed for the month of July. The "per diem" interest on line 901 would thus cover (a) interest due from the date of settlement through the end of June; and (b) interest due for the month of July.

The process of calculating compound interest payable on the amount borrowed between the day the monies are advanced and the day amortization period starts.

The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage. Let's say that the closing date on your new house is August 10th - but your mortgage payments are on the 15th of each month (so your first payment is calculated from August 15th and paid on September 15th). That leaves four days (August 10th to 14th) that aren't accounted for in your first mortgage payment. You have to make an extra payment to make up for these four days; the payment is generally due on your closing date. You can avoid all this by arranging to make your first mortgage payment exactly one payment period (e.g., one month) after your closing date.

Usually involves a fixed loan. When additional repayments are made an interest adjustment cost is at times charged to compensate the lender for loss of interest revenue.

a charge sometimes made by lenders for loss of interest revenue when additional repayments are made on a fixed loan.

A charge meant to compensate a lender for loss of revenue if advance payments are made on a fixed loan.