Cash Reserves After Closing
Outside of the costs associated with your purchase, you also want to plan for month’s reserves. Month’s reserves are documented assets in checking, savings, retirement, or investment accounts left over after you go to closing on your home.
The expression “1 Month’s reserve” is equal to 1 month’s mortgage payment. You must have at least 1 month’s reserve in order to close on your loan with CityWorth. Certain loans may require more than 1 month’s reserve. Although most files only require one month’s reserve, we recommend that you have 3 to 6 months in reserve to make your transition into home ownership smooth.
Sales Price: $150,000
Monthly Payment: $1,000
Cash Due At Closing: $6,000
Checking Account Balance: $1,000
Savings Account Balance: $7,000
401K Account Balance: $2,000
Total Documented Assets Before Closing: $10,000
Assets $10,000 – Cash to Close $6,000 =
$4,000 remaining after closing
or 4 Months Reserves