What is the Difference Between Cash to Close and Closing Costs?

What is the Difference Between Cash to Close and Closing Costs?

Cash to close and closing costs are two often misunderstood terms due to their interrelated nature.

Closing costs are the fees and expenses that buyers and sellers incur to complete a real estate transaction, which can include loan origination fees, appraisal fees, title searches, title insurance, taxes, and attorney fees. These costs vary based on the property location, the type of loan, and the transaction details.

Cash to close, is the total amount of money the buyer needs to bring to the closing table to finalize the purchase. This includes not only the closing costs but also the down payment and any prepaids or credits, minus any earnest money deposits or lender credits. Essentially, while closing costs are part of the cash to close, the latter is a broader term that encompasses all funds required to seal the deal.

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