What Are Prepaid Costs?

Buying a home is a very complicated process especially if you have not done it before. When it comes to the money needed for the transaction most consumers know they need to save up for the downpayment and the closings costs, but most do not know about monies needed for prepaid costs.

Simply, prepaid costs are made up of the first year of homeowner’s insurance, property taxes and the interest from the day you close to the end of the month you are closing in.

Property taxes vary from state to state and taxing municipalities as to whether they are paid in advance or in arrears. Either way, you are going to need to put money into an escrow account for the upcoming bills along with the homeowner’s insurance.

Again, these costs are separate from the mortgage company, title and real estate costs.

It is always best to work with a trusted mortgage professional such as the Home Loan Advisors at Hall Financial who will be able to break all of this down and answer all of your questions.