Other common deferred expenses include startup costs, the purchase of a new plant or facility, relocation costs and advertising expenses. Both prepaid expenses and deferred expenses are important aspects of the accounting process for a business. As such, understanding the difference between the two terms is necessary to report and account for costs in the most accurate way.
Tip: Get the lender to pay the closing costs. If you're short on cash for the closing costs and can't roll the closing costs into the mortgage, some lenders will pay part or all of the closing costs, but in exchange you'll have to pay a higher interest rate on the loan, perhaps 0.25% or 0.50% higher.
The buyers offer to pay the sellers their price, but ask for the sellers to credit $5,000 to them at closing for their nonrecurring closing costs. In effect, the buyers are offering to pay only $195,000 for the home, not the $200,000 that appears in the price section of the purchase offer. Although buyers sometimes use a closing cost credit to lower the purchase price, this is not always the case. Many buyers, particularly first-timers, are short of the cash they need to pay for the down payment and closing costs.