Which item is NOT typically included in mortgage-related prepaid expenses?

Homeowner’s association fees are generally not considered a typical prepaid expense in the context of a mortgage. Prepaid expenses associated with a mortgage usually include costs that are directly related to securing the loan and ensuring the property is protected and maintained as part of the mortgage terms.

Private mortgage insurance, taxes, and hazard insurance are all standard components of prepaid expenses. Private mortgage insurance (PMI) is often required for loans with a down payment of less than 20%, and it serves to protect the lender in case of default. Taxes, including property taxes, are typically required to be paid in advance to ensure that the obligations are met while the mortgage is being paid. Hazard insurance protects the lender by ensuring that the home is rebuilt or repaired in the event of damage.

In contrast, homeowner’s association fees are fees that homeowners pay to community or neighborhood associations for maintenance of shared properties and amenities, but these are not directly tied to the mortgage itself and do not serve to protect the lender's financial interest in the property. Therefore, these fees are not usually factored into the prepaid expenses required at closing for a mortgage.