As closing day gets closer, one number on your paperwork becomes very important: cash to close. It is the amount you need to bring to finalize your purchase. Understanding how it is calculated helps you plan ahead and avoid last-minute surprises.
Cash to close is the total of your down payment and your closing costs, minus any deposits and credits already applied. You will see an early estimate on your Loan Estimate shortly after you apply, and the final figure on your Closing Disclosure, which you receive at least three business days before closing.
Your down payment depends on your loan program. Eligible VA and USDA borrowers may put nothing down, FHA loans require 3.5% down with a 580 or higher credit score, and conventional loans allow as little as 3% down for eligible buyers. Some buyers choose to put down more.
These are fees for the services needed to complete your loan and transfer ownership. Common items include:
You will usually prepay some costs at closing, such as your first year of homeowners insurance, some interest and an initial deposit into your escrow account for future property taxes and insurance.
Several things may lower the amount you bring:
Title companies and closing attorneys need funds that are verified and fully cleared. Typically accepted methods include:
Cash, personal checks and credit or debit cards are generally not accepted. Ask your closing agent ahead of time exactly how they want funds delivered.
Criminals sometimes send fake emails with altered wiring instructions. Before you send money, call your title company using a phone number you know is legitimate, not one from an email, to confirm the details. Also, give your bank enough time to process the wire before closing.
Your lender will verify that your funds come from acceptable sources, such as your savings or documented gifts, and are not borrowed in a way that adds new debt. Avoid moving large sums between accounts or making big cash deposits without talking to your loan officer, since unexplained deposits can delay your closing.
Your estimated cash to close can shift between your Loan Estimate and your Closing Disclosure. Common reasons include a change in your closing date, which affects prepaid interest, updated insurance premiums or property tax figures, new repair credits negotiated after inspection, or a change in loan terms. Certain lender fees are limited in how much they can increase, while others can change. If anything looks different from what you expected, ask your loan officer to explain it before closing day.
Ask your loan officer for an estimate of your cash to close as early as possible, and update it if your terms change. Our mortgage calculator can help with the monthly side, and our low down payment options may help keep your upfront cash needs manageable.
Questions about your closing numbers? Contact FLO Mortgage and we will walk through every line with you.
A FLO Mortgage loan officer can walk through your options, run real numbers and help you choose a loan that fits.
This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.
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