Understanding Cash to Close

What the number includes

Cash to close appears on both your Loan Estimate and your Closing Disclosure. It is built from a few pieces:

• Down payment: the part of the price not covered by the loan.
• Closing costs: lender fees, appraisal, title insurance, escrow and recording fees.
• Prepaids: your first year of homeowners insurance, prepaid interest, and the initial deposit into your escrow account for taxes and insurance.
• Minus credits: your earnest money, seller concessions and any lender credits.

Where the estimate comes from

You receive a Loan Estimate within three business days of applying, and a Closing Disclosure at least three business days before you sign. Compare them line by line; most numbers should match closely, and certain fees are limited in how much they can change.

Some items, like prepaid interest and property tax prorations, depend on your exact closing date, so the final number can move slightly.

Getting the funds to escrow safely

In Arizona, funds go to the title and escrow company handling your closing, usually by wire transfer or cashier's check.

1. 1Make sure the funds are in your own account and documented well before closing.
2. 2Get wiring instructions directly from your escrow officer.
3. 3Call escrow at a phone number you already know (not one from an email) to confirm the instructions before sending.
4. 4Send the wire a day or two early if your bank has cut-off times.

Wire fraud is real. Never trust a last-minute email that changes wiring instructions; always call to verify.

Ways to reduce your cash to close

There are several legitimate ways to bring less to the table:

• Negotiate seller concessions toward your closing costs.
• Choose a lender credit in exchange for a slightly higher rate.
• Use a low down payment program or down payment assistance.
• Ask whether an escrow waiver is available (you then pay taxes and insurance yourself).
• Time your closing date to reduce prepaid interest.