The total amount of funds a borrower needs to bring into escrow before a transaction closes.
Cash to close is the total amount of funds a borrower needs to bring into escrow before a transaction closes. For a purchase transaction, these funds include the entire down payment and all closing costs. For a refinance transaction, these funds include all closing costs.
It is extremely important that borrowers know where these funds are coming from before signing a purchase contract or locking into a refinance, as all lenders require that every dollar used for either transaction be fully sourced and paper-trailed. This means that the lender is required to review the most recent 60 days of asset account activity, explain the source of any large deposits, and potentially collect documentation to follow any large or recurring transfers (if applicable).
Note: "cash to close" is also commonly referred to as "funds to close." "Funds to close" is a more accurate descriptor, because cash is considered impossible to source and should therefore never be used in a real estate transaction.