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.
High closing costs and fees can cut into the profit a seller is expecting to pocket from the sale of his or her home or increase the amount of money the seller needs to come to the closing if the seller owes more money on his mortgages than the amount he or she will net from the sale of the home. A buyerâs closing costs might typically range from 2 to 7 percent of the sales price, or $2,000 to $7,000 on the purchase of a $100,000 home. But a sellerâs closing costs often go way beyond that, simply because most sellers use a full-service agent to sell their home, which can add an additional 4 to 7 percent to the closing cost total.