Understanding Closing Costs: Cash to Close = Down Payment + Closing Costs – Earnest Money – Any Seller/Lender/Agent credits – Grants or Down Payment Assistance Options
Down payment is the dollar amount you contribute up front towards the price of the home. Often discussed as a percentage! Certain programs require you make a minimum contribution to your down payment out of your own funds.
Closing costs include any lender and title fees associated with your new loan, prepaid interest, and your escrow account setup
Escrow account/prepaids cover your property taxes and homeowners insurance – we start with a two-month cushion for each of these to account for any changes when payments are due. In addition, we collect 1 year of insurance at closing. Depending on your purchase agreement and when you close, we will collect a prorated amount of property taxes so you don’t start out behind! Earnest money is the upfront deposit you write into your purchase agreement; consider this a good faith deposit for the sellers. Whatever amount you choose here will be applied as a credit to the remainder of your final amount due.
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