Definitions for "Prepaids"
One time closing costs that are actually paid at the closing for charges that will occur in the future.
This generally includes homeowners insurance, escrow accrual for insurance and taxes, interest to the end of the month and PMI (Private Mortgage Insurance) if necessary.
Pre-paids are the funds necessary to be collected at time of closing to initially set up the escrow account and cover the interest due the lender for the time between closing and the first house payment.