Glossary

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Prepaid Expenses
Prepaid expenses are the buyer costs for things like taxes, special assessments and any insurance that might be paid before the due date. Home buying brings into a play a number of financial costs beyond the purchase price obligation. During the process, buyers are expected to purchase certain things, including home insurance. Depending upon the city and state where the buyer is making the purchase, they may be required to have certain assessments done on the home. These expenses can add a significant amount to the actual price that a person pays for the right to enjoy a property. Prepaid expenses must be taken into account by buyers who want to stay within their budgets. Those buyers who underestimate the outside and extraneous costs of home buying often end up with a total cost of buying that is well above what they were bargaining for in the first place.