Per Diem means “per day” in Latin. In a real estate transaction, mortgage lenders charge interest on a “per diem” basis for loan payoffs and new loan originations. If a loan closes a day early, the seller pays one day less in interest and the buyer pays one more day of interest. The closing company will calculate these numbers from the per diem amounts given to them by the lenders.
Some real estate contracts allow for a per diem charge payable by the buyer to the seller in the event that a closing is delayed.