Cash reserves is the terminology used to describe the extra money left over for the buyer when the real estate transaction closes.
When you apply for a loan to purchase a property, your lender will typically require that you have cash reserves in the bank. Usually they want enough money set aside to cover 2-3 months worth of your new mortgage payment. These funds are above and beyond your down payment and closings costs, so make sure you continue to set aside funds throughout the home buying process.
As a reminder – do not go open any new lines of credit, buy a car, or buy furniture before you close on your new home! If new furniture is in your plan for the home, wait until after the closing to purchase it. I have seen people be unable to purchase their home because of these types of things. Just keep saving and setting aside your extra funds in the bank up to (and after!) closing day.
Please call me if you have any questions about closing a home transaction!
Real Estate 101 is a blog series to help you better understand the terminology and processes of buying and selling real estate. I hope that you find this series helpful!
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