Real Estate

Prepaid Items and Home Closings

Wed Apr 16, 2008 6:43 pm
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If all of the conditions are ultimately met buy a buyer in the home purchase contract process then that buyer will need to understand the cost of prepaid items relating to any house closing/settlement.

Prepaid items include some substantial cost items such as: typically one year extra in advance the cost of a hazard/home owners policy, up to six months taxes, up to six months interest and any other item deemed required by the lender. One of the other items that, if the property being bought is designated on flood maps, could be very costly is Flood Insurance.

Therefore, it is essential to know in advance of signing a purchase agreement that you probably will need to have in excess of $10,000 set aside for pre-paid items at or in some cases required to the lender before the actual closing/settlement date.

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