Home Loans Inc - Understanding Cash to Close

Understanding Cash to Close

February 18, 2021

What are

your goals?

I want to buy a home

I want to refinance

When buying a home, one crucial aspect to understand is Cash to Close

Cash to Close refers to the total amount of money a homebuyer needs to pay at the time of closing to finalize the home purchase. It includes:

Down Payment: A percentage of the home price that the buyer pays upfront.
Closing Costs: Fees for services like appraisal, title search, and loan origination.
Prepaid Items: Future expenses such as property taxes and homeowner's insurance that must be paid in advance.
Credits: Seller or lender credits, or earnest money already paid, can reduce Cash to Close

It's important to note that Cash to Close differs from the loan amount, as it represents out-of-pocket expenses.

It's critical to work with your lender to understand these costs early. Accurately estimating Cash to Close ensures buyers are financially prepared and can avoid last-minute surprises. The lender will provide a Closing Disclosure, a document outlining all expenses, three days before closing. This allows you to review everything and prepare financially. Additionally, any changes in loan terms or seller agreements could impact your final Cash to Close.

Understanding these costs ensures a smoother closing process and eliminates surprises on your closing day.