What does cash to close include?

• A. Only the down payment.
• B. Only prepaid items.
• C. The down payment, closing costs, prepaid items, and adjustments minus any credits or seller concessions.
• D. The closing date and recording fees.

Answer: (C)

Cash to close is the amount the borrower must bring to the closing table to finalize the loan. It includes several components that fund the purchase and the loan setup: the down payment (the portion of the purchase price paid at closing), closing costs (fees such as lender charges, title, appraisal, and escrows), and prepaid items (amounts collected at closing to fund future payments like mortgage interest, property taxes, and homeowners insurance). There are also adjustments, such as prorations for taxes or utilities, which can either increase or decrease the amount owed. Finally, any credits from the seller or concessions from the lender reduce the cash you need to bring. Put together, cash to close equals down payment plus closing costs plus prepaid items plus adjustments, minus any credits or seller concessions.