What Are Prepaid Impounds

Escrow is also known as an “impound account,” and it simply means that a third-party is holding the buyer’s money until the real estate transaction is complete. … Prepaid expenses are necessary to create, or “pre-fund,” an escrow account or to adjust the seller’s existing escrow account.

What does impounds mean on a closing statement?

“Impounds” At closing the buyer sets up an impound (or escrow) account that allows them to bundle the cost of their mortgage principal and interest, taxes, and mortgage insurance into one payment. A buyer might be required to pay some charges, like homeowners insurance premiums or county taxes, in advance at closing.

What are prepaid items on a refinance?

Prepaids are the upfront cash payments you make at closing for certain mortgage expenses before they’re actually due. These include: Homeowners insurance. Property taxes. Mortgage interest.