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.
If the buyer puts 10 percent or more down, the seller may contribute up to 6 percent. If the buyer puts less than 10 percent, the most the seller may contribute is 3 percent. On a VA loan, the seller may pay all the closing costs (this is known as a VA-No-No - the buyer pays no down payment and no closing costs). Sellers who agree to pay the closing costs often put a ceiling on the amount they will pay. On a FHA loan, the seller may pay all the closing costs. However, the buyer must make a minimum 3.5 percent investment in the property - whether as part of the closing costs, a down payment or pre-paid items. The 3.5 percent can be from the buyers own funds or from a family member's gift.