Required Cash

Buying a house is never easy. Besides the down payment (the bigger, the better), you’ll also need to make sure you cover closing costs.

Closing costs are all the little things that add up: title insurance (so you can prove you own the place later), mortgage underwriting (writing the loan), home inspectors (who make sure the house isn’t made of paper or infested with deadly black mold), and others all need to be paid. And you need all these things to buy the home.

The amount of cash you need to buy a house is “required cash.” But you’re taking out a loan, because you don’t have cash. Ugh. Yeah. It takes money to make money, and it takes money to earn equity, too. Required cash-money, that is...a.k.a. “cash to close.”

Required cash also refers to how much money you need to complete a refi (refinance). While it does take money, people often refinance to save money in the long run. For example, if your home has gained equity from a perky market or because you remodeled the bathroom, you could get out of private mortgage insurance earlier than before refinancing. Other times, people refinance to extend their loan. The joys of homeownership.