Prepaid Items
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.
What they are
Prepaid items are costs you pay in advance at closing, like property taxes, insurance, and interest. They fund your escrow and cover early charges.
They are separate from lender fees.
Why they matter
Prepaid items make up a real share of your cash to close. Knowing them prevents surprises at the table.
We spell out every prepaid cost for you. Reach out and we will show your full closing number.
Verify the details for your own situation against these government and agency sources: CFPB Owning a Home guide and HUD homebuyer resources.