U.S. Mortgage Index

Prepaids

Definition

Prepaids are amounts paid at closing for items that come due later, such as interest, taxes, or insurance. Prepaid interest is one item inside this group, not the whole group.

In plain English

Closing collects some costs that belong to the days or months just after closing. Official Loan Estimate language groups those items as prepaids. Prepaid interest is one line. Homeowners insurance and tax items can also appear. The initial escrow deposit is a related but separate startup amount for the escrow account.

Technical definition

12 CFR 1026.37 is PRIMARY for the official Loan Estimate prepaid-items grouping. CFPB key terms supply supporting consumer labels for prepaid interest and the initial escrow deposit.

Why it matters

Shoppers hear no-closing-cost and prepaids used loosely. This page is the official origination grouping.

Sources reviewed