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

Key Takeaways

  • Homebuyers must use a bank-certified payment method at closing.
  • There are pros and cons to both methods. For example, a cashier’s check might be a little cheaper, and the transaction for a wire transfer might be completed faster.
  • If you’re not sure which option to choose, consult your real estate agent and your title company.

If you’ve finally reached the closing stage of the homebuying process, then you are nearing the finish line. 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 are really the only options 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.”

Using a Cashier’s Check for Closing

A cashier’s check is guaranteed by your bank or credit union, often for a fee, and used when the recipient wants reassurance that the check will clear. If the check bounces, then the bank or credit union is responsible, making it a safer way to pay than a personal check.

Cashier’s checks not only feature relatively low fees but also can be helpful if something goes awry at closing, says Chuck Meier, senior vice president and mortgage sales director at Sunrise Banks.

“The check can be made payable to yourself too, so if the deal doesn’t close, you can redeposit the check back into your account with no delays,” Meier says.

If you want a cashier’s check for closing day, you can go into your bank or credit union branch, or you may be able to obtain one over the phone, online or through your financial institution’s mobile app. You will likely need the following:

  • 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.

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Pros and Cons of a Cashier’s Check

Pros

  • Relatively quick. Generally, the funds are available to the recipient the next business day.

  • Guaranteed. No one has to worry about whether the check will clear because the bank backs the full payment amount.

  • Secure. The check has security features, such as watermarks, that reduce fraud. The recipient’s name is printed on the check, and no one else can cash it.

Cons

  • Inconvenient. If your bank doesn’t allow you to request a cashier’s check online, you will need to go to a branch to get one. Checks also rule out a virtual closing because you have to hand them over in person.

  • Check fee. A cashier’s check fee is about $10 to $15. Ask your bank about the fee, though, because it may be waived for certain customers.

  • Fraud. Scammers can create fake cashier’s checks that look real. If you have any doubts about authenticity, contact the bank or take the check to a branch. Look up the bank phone number instead of using the one on the check.

Using a Wire Transfer for Closing

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.

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 and routing numbers.
  • 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

  • Fast. The funds transfer in as little as one business day.

  • Flexible. A wire can be sent based on your own schedule, not by a bank branch’s hours.

  • International. You can provide payment abroad, even if you can’t attend closing in person.

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 each 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’ve 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.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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