Difference between prepaids, closing costs

There is a difference between prepaids, closing costs and fees. Prepaid items are not closing costs. They are monies that would have been paid anyway new home loan or not.

Prepaid items, listed above, are figures on your Closing Disclosure unrelated to the process of getting a mortgage. The exception to this is upfront mortgage insurance premiums (MIPs) for Federal Housing Administration (FHA) mortgage loans.

Closing costs on the other hand, describe all of the fees or charges for actions or items connected to originating and closing a mortgage loan. Closing costs can include things such as:

• Payments to title companies

• Attorney fees

• Governmental title recording fees

• Lender fees

Some homebuyers wonder, "Is the inspection part of closing costs." The answer is "typically not." Generally the homebuyer orders and pays for an inspection to gain a detailed understanding of the home's condition. Sometimes, the homebuyer is able to use the inspection report to gain price concessions from the seller or to negotiate certain repairs to the home. In cases where a homebuyer doesn't pay for the inspection fee promptly at the time of service, inspection fees could be handled at closing as part of the closing costs.