Banking

Should I Use a Wire Transfer or Cashier’s Check for Closing?

The type of certified payment you provide at closing can help you complete your home purchase in a timely and secure manner.

If you’ve finally reached the closing stage of the homebuying experience, then you are at the home stretch. However, closing involves a specific set of procedures that must be followed carefully to avoid delays or complications.

One of these processes is securing a bank-certified payment method, such as a cashier’s check or wire transfer, for closing day.

A cashier’s check or wire transfer is really the only option for a safe and reliable closing transaction, says Steve Hill, lead mortgage broker at SBC Lending in Southern California.

“Most escrow companies won’t accept a personal check due to fraud,” Hill says. “And cash has its own problems with counterfeiting and money laundering.”

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Here’s what to know about both of these payment methods when closing on your home.

If you’ve finally reached the closing stage of the homebuying experience, then you are at the home stretch. However, closing involves a specific set of procedures that must be followed carefully to avoid delays or complications. One of these processes is securing a bank-certified payment method, such as a cashier’s check or wire transfer, for closing day.

A cashier’s check or wire transfer is really the only option for a safe and reliable closing transaction, says Steve Hill, lead mortgage broker at SBC Lending in Southern California.

Here’s what to know about both of these payment methods when closing on your home.

  • Photo ID.
  • Exact check amount.
  • Recipient’s name.
  • Sufficient funds in your account to cover the payment and any check fee.

If you have the funds to cover the payment, your money will then be transferred to the bank. The bank will print you a check with the recipient’s name and the bank’s account number on it rather than your own. Check that the details are correct.
Always get a receipt for your cashier’s check in case it is lost or stolen. Keep the check in a safe place until you need it.

  • Photo ID.
  • Exact check amount.
  • Recipient’s name.
  • Sufficient funds in your account to cover the payment and any check fee.

If you have the funds to cover the payment, your money will then be transferred to the bank. The bank will print you a check with the recipient’s name and the bank’s account number on it rather than your own. Check that the details are correct.
Always get a receipt for your cashier’s check in case it is lost or stolen. Keep the check in a safe place until you need it.

A wire transfer allows you to send your closing payment to the title company or escrow agent directly from your personal bank account. Banks across the world use the Society for Worldwide Interbank Financial Telecommunication, also known as SWIFT, to transfer funds securely across financial institutions.

“A wire can be easily captured digitally and documented for all parties involved in a real estate transaction, and the money is generally available almost immediately, which solidifies the transaction for all parties,” says Tabitha Mazzara, director of operations for MBANC, a mortgage lender.

Unlike a cashier’s check, a wire transfer can be requested by phone, online or in person. A wire transfer may require the sender’s government-issued ID, such as a driver’s license or passport, plus this information:

  • The sender’s and the recipient’s name and contact information.
  • The sender’s and the recipient’s bank account number and routing numbers.
  • The recipient’s ABA routing number.
  • Currency for the transfer.

A domestic wire transfer takes about one business day to receive. If your closing transaction is for a property abroad, an international transfer can be available within three to five business days.

Pros and Cons of a Wire Transfer

Pros:

Cons:

  • Irreversible. If a wire transfer is complete – even if it was an error or a result of fraud – you cannot cancel it.
  • Fraud. Scammers may encourage their victims to send money via wire transfers.
  • Expensive. Wire transfers can be a costly way to send money, especially international wires.

Fees for Cashier’s Check vs. Wire Transfers

Paying by cashier’s check is generally less expensive than wire transfer. The cost of both varies by financial institution.

Sometimes the difference between the two is negligible, though.

Mazzara says, “A cashier’s check generally costs between $10 to $25, and a wire fee is generally $30 to $50.”

Cashier’s Check or Wire Transfer: Which Is Better?

You can discuss with your real estate agent and your title company whether a cashier’s check or wire transfer is better if you’re reviewed the pros and cons and are still uncertain.

Make sure the payment is ready for closing, regardless of which method you choose. Homebuyers often forget that their payment for closing is in escrow one to two days before closing, according to Hill.

 

 

Source: usnews.com

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