What Does Cash-to-Close Mean?
Cash-to-close on a home purchase is a term that can be misleading, but it simply refers
to the total amount of money you need at closing, including:
- Your down payment
- Closing costs
- Prepaids
- Interest
This “cash” is outlined by the good faith estimate you originally received from your lender along with the final closing disclosure you’ll get three days before the closing date.
If you have some cash-to-close held in escrow, such as your earnest money to the seller, it will be added to the rest of your down payment that you bring to closing.
Closing costs range from 2-5% of your loan. These include all the professional fees associated with your home purchase:
- Title searches
- Attorney fees
- Recording fees
- Lender fees, such as appraisals and loan origination fees
Other cash-to-close fees may include pre-paid monies for home insurance, your prorated share of the year’s property taxes, and any government (FHA, VA, USDA) fees tied to your loan. Last, you’ll pay per diem interest between closing day and your first monthly payment due date.
