What is cash to close and how is it different from closing costs?
Separate the transaction’s total required funds from the category of closing charges.
Closing costs are the lender, settlement and other transaction charges associated with completing the purchase and mortgage.
Cash to Close is the broader amount the buyer is expected to bring to closing after the down payment, closing costs, deposits, credits, adjustments and other applicable amounts are combined.
That is why Cash to Close can be different from simply adding the down payment to a quoted fee total.
What can enter cash to close
- Down payment
- Closing costs
- Deposits already paid
- Seller or lender credits
- Prorations and adjustments
- Other transaction-specific amounts
Where to find the estimate
The Loan Estimate shows an Estimated Cash to Close calculation. Before closing, the Closing Disclosure provides updated figures for the actual transaction.
Why the number changes
Final services, credits, tax or insurance amounts, timing adjustments and verified funds can change as the transaction develops. Ask for an explanation of significant changes.
Plan beyond the minimum
Keep separate funds for moving, early repairs and an appropriate reserve. The amount required to complete closing is not automatically the amount you should spend from every available dollar.
Read the complete closing calculation
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