Which Are Prepaid Costs When Buying a Home?

In terms of both lifestyle and financial stability, buying a home in DeBary provides a welcomed sense of reliability to first-time homeowners. While your finances will be easy to predict in the future, knowing all of the costs of actually purchasing the home in the first place is not so simple.

If you are a first-time homebuyer, purchasing a home can do wonders for your health, happiness, and finances. Before you can enjoy all of these benefits, you need to close on the house. Some costs of doing so are prepaid, while you’ll need to pay others out of pocket. Which are prepaid costs when buying a home in DeBary? That’s what we’re here to find out!

Table of Contents

• Which Are Prepaid Costs When Buying a Home?
• Prepaid Interest on a Mortgage
• Prepaid Property Taxes at Closing
• Prepaid Homeowners Insurance at Closing
• Initial Escrow Payment at Closing
• Enjoy Everything Homeownership Has to Offer in Rivington
• Which Are Prepaid Costs When Buying a Home?

Buying a house is expensive! Beyond the asking price of the house itself you also have closing fees, down payments, home inspection fees, and prepaid closing costs. These prepaids are upfront cash payments made before your down payment to obtain a mortgage. Speaking of prepaid closing costs, what are those? They typically entail these four things:

Prepaid Interest on a Mortgage

This accounts for the interest that arises between your closing date and the end of the month. For this reason, how early in the month your closing date falls on plays a huge factor into what you’ll end up paying for this. In order to cut down on how much interest you’re prepaying, pick a closing date closer to the end of the month if you’re able to.

Prepaid Property Taxes at Closing

The seller has to pay for the taxes they owe while owning the house. On closing day, you sign documents saying that the rest of the year is now your responsibility. With great benefits comes big responsibilities! 

Prepaid Homeowners Insurance at Closing

Here in Florida, homeowners insurance isn’t something to take lightly. The next time a hurricane blows into town, you’ll be wishing you had read your insurance documents at closing! Similar to car insurance and health insurance, homeowners insurance rates can vary. That being said, most lenders want you to pay up to one year of premiums in advance to cover homeowners insurance.

Initial Escrow Payment at Closing

Some lenders require this and others do not, so your exact situation at closing will differ slightly in this area. This prepaid escrow deposit acts as a cushion for future payments of either homeowners insurance or property taxes. This money is kept in an escrow account as a sign of good faith to your mortgage lender that you’re serious about buying the house. It can usually be applied to closing costs and down payment once the purchase is finalized. 

We encourage you not to look at these prepaid costs as a bad thing. In fact, prepaid costs can be beneficial for first time home buyers like you because you’ll have the responsibility of all these essential payments off your plate. All of these are things you’d have to pay for later on anyway!

Enjoy Everything Homeownership Has to Offer in Rivington

Which are prepaid costs when buying a home? The prepaid costs listed above are all expenses that you would pay for anyway. You’re simply paying for them early so you can focus on other things for the time being. You will be paying for these costs no matter what, and it’s a standardized part of the home buying experience.

Have you been weighing your options and considering whether it’s time to buy a house? We are here to tell you that the answer is a big, resounding yes! DeBary, Florida homeownership may seem like a daunting task, but the payoff is highly rewarding!