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Details of pre-paid expenses and escrows for GA real estate closings

September 8, 2015
From Loan Officer Shellie Sexton

From Loan Officer Shellie Sexton

Closing costs typically refer to costs charged by mortgage companies and other parties. Pre-paid expenses and escrowed funds are also included in settlement statements and are sometimes referred to as closing costs, although they are actually a separate category. Details of pre-paid expenses and escrows for GA real estate closings is offered in this blog.


Pre-paid expenses are items due at settlement but actually apply to an upcoming time frame. Popular pre-paid charges are hazard insurance and interest. Insurance has an annual premium payable up-front. Some home owners pay the premium directly to the insurance provider before the closing, while some do so at closing.

Interest is another pre-paid cost. Mortgage payments are typically paid in arrears, meaning that they cover a previous time frame. For instance, if you buy real estate January 15th, your first monthly payment would be due on March 1st, and it covers the February time frame. So there is no payment to cover January 15th-31st. The interest for that period is due at the closing as pre-paid interest.

Escrowed Funds for Real Estate Purchases

Escrows are funds deposited into a holding account, known as an escrow account, and dispensed when needed. They are intended to cover recurring items such as mortgage insurance, real estate property taxes, and hazard insurance. Each month, included in the monthly mortgage payment, a certain amount of money is deposited into the escrow account. When the bills are required, the money is withdrawn from the escrow. This accomplishes two goals. First, it reduces the hardship of home buyers having to save for the large fees. Secondly, the lender knows that the bills are paid, which preserves their interest in the home. Escrows are not offered by all mortgage companies, but it is frequently required for mortgages with lower down payments.

Details Of Pre-paid Expenses And Escrows For GA Real Estate Closings

The amount of pre-paid expenses and escrows can vary depending on the time of year in which you buy a home. Closing close to the end of the month will normally reduce certain ones. Property taxes and escrows will depend on the community and when invoices are issued. If minimizing cash needed at closing is critical, discuss the time frame with your real estate agent and mortgage consultant. For more guidance on the above Details of pre-paid expenses and escrows for GA real estate closings, you may contact Guaranty Mortgage via phone at 770-614-7425 or apply online at >

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