01
Prepaid expenses
Settlement statement and invoice
Record what bill is paid now and the coverage period; distinguish prepaid interest from insurance.
Loan terms · field guide
Prepaid bills and escrow funding are not the same line
Reconcile which costs pay a bill now, which fund a future account and which recur in the monthly payment.
Sources checked November 1, 2026 · Educational document review · No loan offer
Build the evidence before choosing an input
02
Initial escrow
Escrow setup statement
Record the account funding, covered items and timing; it is not automatically an additional annual expense.
03
Monthly escrow
Payment estimate and analysis
Identify which tax and insurance bills are included and which expenses, such as HOA, remain outside the account.
Fictional recurring-cost reconciliation
An authored teaching record; amounts and situations are fictional, not market statistics or actual borrower files.
- Annual tax estimate: $4,800. Annual insurance premium: $1,200.
- Recurring equivalent: ($4,800 + $1,200) ÷ 12 = $500/month.
- A separate assumed $1,000 initial escrow deposit is a closing cash item; it is not added as another $1,000 annual tax or insurance bill.
Confirm periods and account funding before deciding whether any line is duplicated.
Turn the record into a usable next step
- 1
Mark each closing line as a fee, a bill payment, an account deposit or a transfer adjustment. Ask the settlement professional about ambiguous entries.
- 2
Compare the prepaid insurance period with what the escrow account is accumulating for. Request an explanation where the same bill appears to be paid twice.
- 3
Keep the recurring $500 in the payment budget for this example and the initial deposit in cash to close. Recheck after actual bills arrive; escrow can change even with a fixed interest rate.
What this evidence does not settle
Consumer disclosure examples illustrate categories; they do not promise a particular form, escrow requirement, cushion or timing rule for every business-purpose loan.
Sources and scope
- CFPB — Closing Disclosure explainer
Separates prepaids, escrow, monthly costs and closing adjustments in consumer-loan documents.
Read November 1, 2026. This is the check date, not a new effective date for the source.
- CFPB — Escrow or impound accounts
Explains tax and insurance payments through a servicer and changes in those expenses.
Read November 1, 2026. This is the check date, not a new effective date for the source.
The review steps are DSCRDealCheck’s editorial checklist. Agency guides and consumer mortgage explainers define documents and concepts; they do not establish a DSCR provider’s program rules or guarantee that consumer disclosure requirements apply to business-purpose financing. See the transaction-scope distinction in Regulation Z. Confirm the actual file with the provider and the relevant qualified professional.
Continue the loan terms review
Choose the unresolved document in your file. Each guide addresses a different input or obligation.