What are “Prepaid” fees?
Most borrowers are aware that there are closing costs associated with obtaining a mortgage, however, these are not the only fees you will be required to pay at closing. Fees for items required by the lender to be paid in advance or “prepaids” are also due at closing. These fees are not legally referred to as “closing costs” but are still required to be paid at closing and are disclosed to you on the Good Faith Estimate, Fee Sheet and HUD1 settlement statement.
Prepaid fees include:
Items required by lender to be paid in advance (lines 901-905)
Daily interest charges from the day the loan funds till the end of the month
- Mortgage insurance premium if required
- Homeowner’s insurance premium for the first year
- County Property Taxes due if not yet paid
- Homeowner association fees (HOA)
Reserves deposited with lender (lines 1001-1009)
Initial deposit for your escrow account for future homeowner insurance, taxes and mortgage insurance payments
At First Nations Home Mortgage, Inc., we answer questions about closing costs every day. Give us a call today.