Cash to close is an important component of home buying. It covers the cost of everything you need to bring to closing – including your down payment, closing costs, lender fees and more. In this article, we will explore what is cash to close, how it’s calculated and how it differs from closing costs.
What is Cash on Hand?
“Cash on hand” is the current liquid assets that a person or company has on hand, such as available credit balances in checking, savings and money market accounts. It also includes a portion of accessible equity in real estate and equipment.
A person’s cash on hand can affect the purchase and credit decisions of a business or individual, particularly in the event of an emergency.
The amount of cash on hand can also play a role in a company’s ability to secure a loan or set interest rates. In some instances, a creditor may require proof of liquid assets before extending a credit. Also read https://www.sellsoonbluemoon.com/sell-your-house-fast-in-richmond-mi/
Generally, the higher the amount of cash on hand, the lower the risk that a business or individual will default on their debt. In other cases, such as the purchase of a vehicle or piece of real estate, an available credit balance can be a major factor in purchasing decisions.
What are Closing Costs?
Closing costs are the fees that you pay when you buy a home, such as an appraisal fee. They also include any legal fees that you might have to pay if you hired an attorney to help you through the process. These expenses vary from one mortgage lender to another and from state to state.
These fees are a part of the process of obtaining a mortgage loan and can make your cash to close significantly higher than it otherwise would be. However, you can avoid the extra fees by asking for seller concessions or a lender credit to reduce your closing costs.
What Are the Different Types of Closing Costs?
There are several types of closing costs, including appraisal fees, title insurance and home inspections. In addition, some government loans like FHA loans or VA loans may come with specific fees that are added to the total closing costs. These include a VA loan funding fee and an upfront mortgage insurance premium.
You will find your cash to close on your Closing Disclosure, which is a five-page document that outlines the mortgage loan details. The closing disclosure is typically sent to you by the lender in advance of your closing date. It’s important to read your Closing Disclosure carefully to ensure that you understand the entire process of getting a mortgage.