Prepaid Items
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Prepaid items are upfront charges for expenses like homeowners insurance, property taxes, and per-diem interest that a lender collects at closing to fund the escrow account and cover interest before the first payment.
What Prepaid Items means
Unlike closing costs that pay for services, prepaids fund future obligations. Lenders typically collect a full year of homeowners insurance, several months of property taxes to seed escrow, and daily interest through month-end. The amount varies with your closing date and local tax timing.
Florida example
A Sarasota buyer's prepaids included a $2,400 annual insurance premium, three months of property taxes. 18 days of per-diem interest, totaling roughly $4,100 collected separately from the lender and title fees.