“Prepaids” are funds that must be paid in advance at closing, such as homeowner insurance premiums and real estate taxes.  Only a buyer pays prepaids.

If you are a buyer getting a rebate, make sure you max out your prepaids as much as possible. Lenders limit them, but you may be able to pay up to a year’s worth of property taxes and homeowner’s insurance into escrow. This can be helpful if you need to consume a big rebate.

Then again, who gets a big rebate these days? A modest one at Redfin (for who knows how much longer), but the days of the Big Rebate are over.


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