If you are preparing to close on a home, you will likely need to wire money for closing. This can be a significant amount, often tens or hundreds of thousands of dollars, sent to a title or escrow company.
However, the process of wiring money at closing is standard practice and can be secure and efficient when you understand the steps, timing, and safety precautions.
What does it mean to wire money at closing?
Wiring money at closing involves electronically transferring funds from your bank account to the title or escrow company handling your home purchase. This process is quick and ensures that the funds are verified, guaranteed, and irreversible once sent.
The funds wired at closing typically include the remainder of your down payment, closing costs, prepaid property taxes and homeowners insurance, lender fees, and escrow adjustments.
How to wire money at closing (step by step)
When wiring money for a house closing, it is important to verify the wire instructions provided by your title or escrow company. These instructions include details such as bank name, routing number, account number, beneficiary name, and property address.
It is crucial to check your bank’s wire policies ahead of time to ensure there are no limits or restrictions that could delay the transfer. Additionally, review your closing disclosure or settlement statement to confirm the exact amount you need to bring to closing.
Initiate the wire transfer 24-48 hours in advance to account for any potential delays. Once the transfer is complete, be sure to request a receipt with the transaction reference number for your records.
After transferring the funds, make sure to contact your escrow officer to confirm receipt of the funds.
It’s important not to assume that everything went through automatically. Some title companies require confirmation of receipt before allowing documents to be recorded, so early confirmation can help prevent any unexpected delays.
Protecting Against Wire Fraud at Closing
Wire fraud is a significant risk during the closing process, but it can be prevented.
Scammers may gain access to a real estate agent’s or title company’s email account and send convincing emails with fake wiring instructions in hopes that buyers will send funds without verifying the details. However, title companies typically do not change wiring instructions mid-transaction.
Here are some tips to protect yourself:
- Always verify wiring instructions by phone using a trusted number.
- Be cautious of last-minute changes or urgent requests.
- Watch out for unusual email addresses or spelling mistakes.
- Use a secure computer and WiFi network for online transfers.
- Double-check all details before sending any funds.
If you suspect that you have sent money to the wrong account, contact your bank immediately to initiate a wire recall and inform your title company promptly. Acting swiftly increases the chances of recovering the funds, as most wire transfers are final and irreversible.
Choosing Between a Check or Wire Transfer for Closing
During a home closing, the funds you bring must meet “good funds” requirements, meaning they must be verified and immediately available before the transaction can be completed.
Personal checks may not meet this standard as they can take days to clear. Buyers usually bring closing funds in the form of a wire transfer or a cashier’s check, both of which are secure and reliable due to their verified funds.
For larger amounts, wire transfers are often preferred for quick verification and convenience. Cashier’s checks may be accepted for smaller amounts, depending on the title company’s policies.
It’s advisable to check with your title company in advance to determine their preferred method of payment.
Common Wire Transfer Issues
Delayed Clearance: Wires typically take 1-4 hours to process. If there’s a delay, contact your bank with the reference number to ensure the funds are not held up in the fraud department.
Name Accuracy: Ensure your name matches your ID exactly to avoid any issues with the transfer.
Missed Cutoff Time: If you miss the wire transfer cutoff, you may still sign documents in escrow, but the keys won’t be released until the funds arrive, potentially delaying the process.
Simplifying the Wire Transfer Process at Closing
While transferring a large sum for a home purchase may seem intimidating, using a wire transfer is straightforward. Ensure funds are available in your account, understand your bank’s wire transfer policies, and always verify wiring instructions with your title company before sending the funds.
By following these steps, your closing day will proceed smoothly without complications.