For anyone who has gone through the home-buying process—or is about to—arriving at the closing table is a wonderful moment. By this time, your offer was accepted, you’ve completed your inspection, and perhaps a small amount of negotiation followed. Regardless, both parties have arrived at agreeable terms, and the deal is about to be finalized.
Beyond closing, the only thing left to do is officially be “on record” at the Register of Deeds as the property owner. Before that can happen, you need to complete the closing process. And there is a small amount of confusion regarding the differences between “cash to close” and “closing costs.” Although they may sound similar, they refer to different aspects of the process.
Cash to Close
To start, cash to close doesn’t refer to cash. Sometimes real estate agents or attorneys will refer to it as funds to close. However, cash to close is critical because it is the amount of money you will need to bring on the day of the closing.
Before getting into closing costs, it should be noted that any fees tied in with closing costs are included in the money you bring to the closing—i.e., cash to close.
Along with closing costs, other elements contribute to how much you must arrive at closing with. The primary one (and likely most significant) is the down payment. You will also hear your attorney refer to credits. Before closing, you may have already given money for any number of things, such as fees to your lender. That money is credited at closing.
Another common question is how they will know how much money they will need to bring to closing? Before your closing, you receive a “CD” or closing disclosure. This itemizes and breaks down everything from the cash to close amounts to the projected payments over the life of your loan.
Closing Costs
Closing costs are tied into the cash to close amount. Other than property taxes, the majority of closing costs are fees for the following items:
- Title insurance
- Home inspection
- Home appraisal
- Application for your credit check
All of which will be explained in your closing disclosure.
Thomas & Webber Law At The Lake
If you have any questions regarding closing costs, cash to close, or anything else related to real estate law, contact Thomas & Webber to schedule a consultation. We want you not only to enjoy the process of buying or selling your home, but you should go to the closing table with confidence that our knowledge and experience will provide you with.
Thomas & Webber Law at the Lake
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