 Sam
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 Posted: Fri Apr 09, 2004 3:33 am Post subject: Prepaids - Advance Payments for Mortgage Closing |
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Mortgage lenders often require you to make advance payments at the time of loan closing. The payments are made on items such as interest, property taxes, first annual premium for homeowners insurance including that of hazard insurance. Such expenses are known as the prepaids.
The expenses are required when you are about to create an escrow account. The lender uses this account to pay off your property tax and insurance payments whenever they are due.
Being a borrower, you alone will have to make payments on the prepaids. The property tax includes the amount that the state, locality or both assesses on the basis of your property value. Only the property taxes due at closing are included in the prepaids. The future taxes on the property are paid off along with the monthly installments on your mortgage. |
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