What does the term 'estimated cash to close' mean?

What does the term 'estimated cash to close' mean?

• A. The down payment only.
• B. The total amount the borrower will need to bring to closing, including closing costs minus credits.
• C. The seller's proceeds from the sale.
• D. The loan amount requested.

Answer: (B)

The main idea is that estimated cash to close is the total amount the borrower will need to bring to the closing table to finalize the loan. It combines the down payment and all closing costs (like origination fees, title insurance, recording fees, prepaid items such as taxes and homeowners insurance, and any prepaid interest) and then subtracts any credits the borrower receives (such as lender credits or seller concessions). This is the amount you actually have to bring to closing, not just the down payment, not the loan amount, and not the seller’s proceeds. For example, if the down payment is 20%, closing costs total $6,000, and there are $1,000 in credits, the estimated cash to close would be $5,000. This helps you budget for the closing day and understand what you need to bring, whereas the loan amount and seller proceeds refer to different parts of the transaction.

The main idea is that estimated cash to close is the total amount the borrower will need to bring to the closing table to finalize the loan. It combines the down payment and all closing costs (like origination fees, title insurance, recording fees, prepaid items such as taxes and homeowners insurance, and any prepaid interest) and then subtracts any credits the borrower receives (such as lender credits or seller concessions). This is the amount you actually have to bring to closing, not just the down payment, not the loan amount, and not the seller’s proceeds.

For example, if the down payment is 20%, closing costs total $6,000, and there are $1,000 in credits, the estimated cash to close would be $5,000. This helps you budget for the closing day and understand what you need to bring, whereas the loan amount and seller proceeds refer to different parts of the transaction.