How much padding to add to "cash to close" for real estate purchase?

[Lucky Recardito]

Question for anyone who has purchased real estate recently enough to remember... how accurate was the "cash to close" number in your closing disclosure?

I just received our closing disclosure for the closing on our new-to-us home this Friday 10/14, and will be setting up a (terrifyingly and also empoweringly gigantic) wire transfer on Thursday. I know I should add *something* to the cost I've been given on the assumption that some calculation will be re-worked on closing day, and I know I'll get any overage back as a check from the Title Company at closing... but how much padding should I add? A couple hundred bucks? A couple thousand bucks? A percentage of the planned cash to close?

My last (and only other) real estate closing was over 8 years ago and I truly don't remember.

[garion]

We bought a house just over a month ago and we paid the exact amount of cash to close. We were instructed to bring a check book in case we needed to pay a small amount extra, but we did not need it.

[Mother Fussbudget]

Typically, the title company pads the amounts for you.  I've purchased 7 homes, and have ALWAYS received a check back from the title company once closing was complete.  My most recent home, I got a $5K check back from them.  YMMV

[Lucky Recardito]

Ah. Thanks, both! I might be over-thinking this. I'll pad a little bit (just for my own sanity and sense of security) and try not to worry!

[zephyr911]

Are you paying cash for the whole purchase or is it financed?

[Lucky Recardito]

It's financed. 

I just connected with our mortgage broker this morning, and his suggestion was to add roughly $1,000 to the amount we transfer as a buffer.

[Jon Bon]

How far out are you from closing?

In my experience I sent the money the day before, or had a check cut. It was always to the penny. Sure if you are sending your money 3 weeks in advance you might need to pad a little bit. However I would NEVER do that.

There has to be more to this story, is there a specific item the title agency is waiting on that is somehow a wildcard? Again I have been to the penny on the past 7 house closing in the past 4 years.

[ender]

How far out are you from closing?

In my experience I sent the money the day before, or had a check cut. It was always to the penny. Sure if you are sending your money 3 weeks in advance you might need to pad a little bit. However I would NEVER do that.

There has to be more to this story, is there a specific item the title agency is waiting on that is somehow a wildcard? Again I have been to the penny on the past 7 house closing in the past 4 years.

We got a detailed breakdown of our finalized closing costs the week of our closing. So I just wrote a check to the penny.

[Lucky Recardito]

Closing is tomorrow and I'm setting up the wire today (so nothing too far in advance). I'm not overly concerned -- there are just a lot of moving pieces, and I've heard a couple of "well, THAT was annoying" stories from friends and co-workers who wound up $100 short and had to run out for a certified check mid-closing. But maybe I have unlucky friends, and/or maybe Chicago's title companies are worse at math than in other places.

I've decided to go a bit above the amount in our final closing disclosure (provided on Monday) -- we've been assured we'll leave the closing with a check for any overage in our hands. I'll update here on how it went -- if the closing disclosure was off, I'll try to ascertain which figures changed, and why.

[arebelspy]

Closing is tomorrow and I'm setting up the wire today (so nothing too far in advance). I'm not overly concerned -- there are just a lot of moving pieces, and I've heard a couple of "well, THAT was annoying" stories from friends and co-workers who wound up $100 short and had to run out for a certified check mid-closing. But maybe I have unlucky friends, and/or maybe Chicago's title companies are worse at math than in other places.

I've decided to go a bit above the amount in our final closing disclosure (provided on Monday) -- we've been assured we'll leave the closing with a check for any overage in our hands. I'll update here on how it went -- if the closing disclosure was off, I'll try to ascertain which figures changed, and why.

Bump.  :)

[zephyr911]

Closing is tomorrow and I'm setting up the wire today (so nothing too far in advance). I'm not overly concerned -- there are just a lot of moving pieces, and I've heard a couple of "well, THAT was annoying" stories from friends and co-workers who wound up $100 short and had to run out for a certified check mid-closing. But maybe I have unlucky friends, and/or maybe Chicago's title companies are worse at math than in other places.

I've decided to go a bit above the amount in our final closing disclosure (provided on Monday) -- we've been assured we'll leave the closing with a check for any overage in our hands. I'll update here on how it went -- if the closing disclosure was off, I'll try to ascertain which figures changed, and why.

Ever since the new TRID rules went into place, they're supposed to give you an accurate estimate well before closing. But even before that, good lenders were coming in with exact amounts in time to get your wire transfer on the dot. If they have to add a $1,000 buffer just to avoid coming up short, they're doing sloppy work.

[Lucky Recardito]

Bump.  :)

Hahahaha you caught me. GUESS WHAT GUYS? Trying to (1) close on a new home, (2) move, (3) close on the sale of current home, and (4) get married in the span of 3 weeks while also working full-time is SUPER-DUMB. We're between (1) and (2) right now and I am losing my mind.

I purposefully set out the closing paperwork with the pre-closing estimate to update this post last week, and then managed to pack it away for the move before actually sitting down with the computer.

I'll dig out the figures when I have 10 minutes to think, and when I've figured out what box I put it in. :-) Short story is that our cash to close went DOWN and we walked with a big refund check from the title company. The estimate failed to include the transfer of tenants' security deposit and portion of October rent (building is a 2-flat that comes with renters) -- but there were some smaller difference hiding in there as well, and those are the ones I want to suss out!

[robartsd]

I purchased a home this summer. While shopping for loans, we got estimates of costs with various levels of warning that the costs were not fixed until rates were locked and all providers of services were selected (title company, etc.). About a week prior to close, we were given an exact amount to bring to closing. I went to my bank and got a cashier's check for that amount before going to the closing meeting.

[Dicey]

It's financed. 

I just connected with our mortgage broker this morning, and his suggestion was to add roughly $1,000 to the amount we transfer as a buffer.

OP, I've read through to the end, but wanted to circle back to this point. I have purchased at least eight houses (too lazy to count at the moment) and NEVER had to get more cash at closing. What kind of agent tells his clients to add an extra GRAND? Not a very experienced one. Sorry he/she gave you such shifty shitty* advice. Closing on any property is hard enough these days, but needing to throw in an extra $1,000 at the eleventh hour was crazy. Glad it all worked out for you and congrats on your new home. Raspberries to your agent.

ETA: *Dear Auto Correct, I said "shitty" and you wrote "shifty". Do you know lalison's agent, too? XO, Diane C.

[arebelspy]

Congrats on the closing, and marriage!  :)

[Metric Mouse]

Bump.  :)

Hahahaha you caught me. GUESS WHAT GUYS? Trying to (1) close on a new home, (2) move, (3) close on the sale of current home, and (4) get married in the span of 3 weeks while also working full-time is SUPER-DUMB. We're between (1) and (2) right now and I am losing my mind.

I purposefully set out the closing paperwork with the pre-closing estimate to update this post last week, and then managed to pack it away for the move before actually sitting down with the computer.

I'll dig out the figures when I have 10 minutes to think, and when I've figured out what box I put it in. :-) Short story is that our cash to close went DOWN and we walked with a big refund check from the title company. The estimate failed to include the transfer of tenants' security deposit and portion of October rent (building is a 2-flat that comes with renters) -- but there were some smaller difference hiding in there as well, and those are the ones I want to suss out!

I hope # 4 went well!

[Lucky Recardito]

Okay, here's the final comparison, for those of you following along breathlessly...

We needed about $3K LESS at closing (per the ALTA settlement statement) than we'd been told earlier in the week (via the closing disclosure.

Differences:

• Our loan-related fees were about $600 less at closing than they were listed on the disclosure. Here's why: our mortgage broker knocked off some of the fee as a referral thank-you to our realtor (they work together a lot); the disclosure didn't include that discount (but the final ALTA did). If I'd reviewed the disclosure more carefully in relation to our loan docs, I would have noticed this.
• The building we purchased is a 2-flat with one unit currently rented, and closing included transferring us the current tenants' security deposit ($1480) and a pro-rated amount of October rent (~$812). I knew this money was coming to us, but I didn't know it was part of the whole overall settlement. I thought we'd get a check from the sellers for this stuff separately. Totally obvious now that it's done, but not something that was included in the disclosure estimate.
• The title company requested a location endorsement at closing that wasn't on the disclosure. If I had had any patience left at closing, we could have probably fought it away (our lawyer said he didn't think the endorsement was needed given that we had an appraisal for our loan). But my patience and level of gumption for such arguing have been a little sapped lately, so we let it go. $185 difference NOT in our favor.
• The disclosure estimate used a local average $$ for lawyer costs; ours was actually a few bucks cheaper. I did actually spot this difference in advance.

All in all, we did wind up padding our wire transfer by ~$1K, so we left the closing with a check for $4K to deposit right back where it came from.

I'm not blaming anyone for anything shady (or shitty :-) ) -- just interested to see how everything shook out in the end!

For anyone else facing this query, I think I'd still pad the disclosure estimate a bit, just to avoid slowing down the closing more than necessary (especially if the deal includes financing, and especially if you live in a heavily regulated area in terms of title transfers -- here in Chicago, for example, the number of different fees and stamps and "email fees" is astounding). All it takes is for one data-entry person at one point in a 20-person chain to be off by $10 and everything goes wonky. And it wasn't a big hassle to receive an overage check back at the end of the transaction -- sure, it was out of our account for about 48 hours, but it went right back to its safe little home as soon as possible!

Tomorrow, we move in... Tuesday, we close on the sale of our place... in a week, we get hitched. WE'RE GONNA MAKE IT.

[arebelspy]

Congrats on all those awesome changes.  Hope everything goes as smoothly at the wedding as with the closing!  :)

[Metric Mouse]

Thanks for the update!