Required Cash

Definition of 'Required Cash'


The total dollar amount that must be posted up front by the buyer to close a mortgage or to refinance an existing property. The required cash amount can include any of the following amounts if they are requested at closing:

-Any down payment
-Points or other fixed charges to the lender
-Insurance premiums
-Title insurance or per diem interest

The required cash should be expressed on the Good Faith Estimate of Settlement, which is a mandatory step in the lending process.

Investopedia explains 'Required Cash'


While taking out a mortgage used to require a 10-20% cash down payment, newer types of mortgages along with an easy credit environment relaxed standards to the point where many people were able to borrow large amounts with no down payment. That cost didn't just vanish, however, it was simply added to the principal due on the mortgage, leading to higher interest costs over the life of the loan. "No down payment" and "interest only" mortgages were one of the hallmarks of the subprime lending boom during 2004-2006, but many of these borrowers will end up having their homes foreclosed as a result of rising interest rates and lack of equity buildup.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Amplitude

    The difference in price from the midpoint of a trough to the midpoint of a peak of a security. Amplitude is positive when calculating a bullish retracement (when calculating from trough to peak) and negative when calculating a bearish retracement (when calculating from peak to trough).
  2. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs.
  3. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  4. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  5. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  6. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
Trading Center