Legal Definitions - recurring closing costs

Recurring closing costs are expenses paid at the time a home purchase is finalized that represent the initial payment of costs you will continue to pay regularly over time as a homeowner. Unlike one-time fees, these are the first in a series of ongoing financial obligations directly associated with owning and maintaining the property or its financing.

• Private Mortgage Insurance (PMI) or Mortgage Insurance Premium (MIP)

  Scenario: A buyer purchases a home with a down payment that is less than 20% of the home's value. To protect the lender against potential default, the buyer is required to pay mortgage insurance.

  How it illustrates the term: At closing, the buyer often pays the first month's premium for PMI or MIP. This payment is a recurring closing cost because it is the initial installment of an expense that will continue to be paid monthly, typically as part of the mortgage payment, until the homeowner builds sufficient equity in the property or refinances the loan. The payment at closing is just the beginning of a series of ongoing premiums.

• Ground Rent

  Scenario: In specific geographic areas, a homebuyer might purchase a property where they own the physical building but lease the land it sits on from a separate landowner. This arrangement requires regular payments for the use of the land.

  How it illustrates the term: The first payment of ground rent, covering a specific period (e.g., a quarter or a year), is typically due at closing. This is a recurring closing cost because the payment made at closing is the inaugural payment in a continuous series of lease payments that the homeowner must make for as long as they own the home on that land. It's an ongoing obligation initiated at the closing table.