Closing Costs vs Prepaid Costs
So what’s the difference between closing costs vs. pre-paid expenses? Simple!
Closing costs are one-off payments due at closing for things like:
Title company fees and title insurance
Government fees and taxes to record the property sale
Real estate commissions (typically paid by the seller)
Pre-paid expenses are upfront, ongoing payments due at closing for items folded into the monthly costs of homeownership. Things like:
Homeowners insurance premiums
Initial escrow deposit
Pre-paid expenses head to an escrow account set up by your lender where they hang out until they’re due each year.
Got other real estate lingo questions? Send ‘em my way and I’ll be happy to answer!