Taxes, Insurance, and interest are also costs associated with selling your home. These fees may be prorated, meaning they are spread out over a certain time period, depending on the date escrow closes. Sometimes, you will be required to prepay interest on your home loan, insurance, or taxes, depending on your particular situation. These costs might be included in your monthly payment plan, or you might instead pay taxes and insurance separately. If you pay these costs separately, you will have to provide proof at the close of escrow that the payments have been made.

Property taxes are assessed at the time of property transfer. You will be responsible for paying your property taxes quarterly, semi-annually, or annually, depending on your local government. While this varies from one state to the next, property taxes are often prorated and split between the buyer and seller. However, you may also pay monthly though and Impound Account (see below)

Lenders require borrowers have insurance on their homes. This insures the lender in case of property damage, fire, or flood. If borrowers are paying their own insurance, they can generally choose the company and compare quotes, depending on the kind of coverage desired. Insurance may be paid monthly, through an Impound Account, or annually or semi-annually if the borrowers are paying outside of escrow.

First time buyers are often confused about the difference between including payments for taxes an insurance in the monthly payment versus paying it separately. There are benefits to both sides.

When you have your property tax and insurance included in your monthly payments, this is called an Impound Account. When you choose this option you do not have to worry about sending separate checks to separate companies. Another benefit is that it is often easier for people to pay this way because property tax and home owner's insurance, both which are usually due twice a year, can add up to a substantial fee. Sometimes it is difficult to budget for such large expenses.

On the other hand, if you pay these costs separately, you can reduce your monthly payments and pay the larger payments of tax and insurance when they come due during the year.

The interest on your loan will need to be paid until your first payment. This is considered a "pre-paid" cost. When you first buy your home, you will generally have a month without any payments. However, you will still be responsible for the amount of interest incurred during that first month.