FAQ
Prepaid Items Explained: Interest, Insurance, and Escrow at Closing
Prepaid items are costs paid at closing that represent expenses for future periods — prepaid interest (from closing to end of month), insurance premium, and escrow setup (initial deposit).
Details
The Full Answer
- Prepaid interest: per-diem interest from closing date to end of the month
- Homeowners insurance: first year premium paid in full at closing
- Initial escrow deposit: typically 2–3 months of property taxes + 2 months of insurance
- Total prepaids: typically $4,000–$10,000+ depending on property tax rate and closing date
CTC's Role
How CTC Processing Handles This
CTC Processing calculates prepaids accurately at intake so borrowers and LOs have accurate closing cost estimates from the beginning. Prepaid items are often underestimated in initial estimates — CTC uses actual property tax data where available.
Have more questions?
CTC Processing works with Colorado loan officers. Call 970-222-2615 or email ctcprocessingllc@gmail.com.
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