October 1, 2021
The big day is almost here, and soon you will be going to closing to sign the papers for your new home. In preparation, you may need to wire funds to cover any remaining closing costs and down payment amount. Read on to find out more about wiring funds, including timing and essential safety tips.
What is a wire transfer?
A wire transfer is an electronic transaction that you can use to send money from one financial institution to another. Wire transfers aren’t as common as other payment methods. They’re mainly used for larger transactions like wiring funds for escrow closings.
Often lenders require borrowers to wire funds to pay for closing costs and down payments. They’re similar to an ACH transfer but faster.
Mortgage wire transfers are the preferred way to send closing funds because the money typically arrives within 24 hours. The average cost is around $25 per transfer. One thing to note is if the recipient has received the funds, the transfer can’t be reversed.
More information is needed for wire transfers compared to other methods. So, it’s a bit more complicated than paying for something online with a credit card. But that additional required information provides added security.
One of the most significant downsides is that closing wire transfers for mortgages is heavily targeted by online criminals, especially via email phishing.
What is phishing?
Phishing is a type of cybercrime that's very prevalent — especially in the mortgage industry.
Here’s how it works:
- Pretending to be the closing agent or lender, the scammer contacts the borrower via email, phone, or text and gives them different instructions for wiring their money.
- If the borrower follows these bogus instructions and sends their funds to the new location, their money is lost since their funds are going to the criminal — not the closing agent.
The phishing emails and websites are very convincing. They can look exactly like the legitimate ones. That’s why it’s important to never click on links or call the phone number in an email giving you conflicting instructions. Instead, contact your loan officer or closing agent immediately.
Safety Tips for Wiring Funds for Closing
Now that you’ve learned about cybercrime, you can see why it’s essential to work closely with your loan officer and the representative from your title company or closing attorney.
- Follow their instructions exactly. If there are any last-minute changes, call them at their main number, not any number given in an email, text, or phone.
- It’s also good to call the closing agent right before you transfer funds to confirm the instructions. Once the money is transferred, call again, and let them know you sent the wire.
Steps for Wiring Funds for Closing
The instructions for wiring money for closing will come from your title company or closing attorney. They tell you how much to wire and where to send it.
To send the wire transfer for closing, you’ll need to contact your credit union or bank (wherever the funds are coming from) via phone or in-person and find out their procedure. Some require that you go into a branch. Others assist you over the phone or instruct you on how to wire funds online.
Remember, you must not click on any links or call any numbers listed on the email if you receive any changes to instructions. Call your loan officer or closing agent immediately.
When do you wire money for closing?
You’re now at the final steps in the loan process. You will receive closing disclosures at least three days before you’re scheduled to close. That disclosure will tell you how much money you need to wire. You can also double-check with your loan officer to confirm the amount. They will also tell you when to wire money for closing.
Avoid Wiring Money Day of Closing
Wire your money one to two days before closing. Don’t wait and try wiring money day of closing day. There’s too much going on, and there’s no guarantee the funds will be available. That could lead to you closing late and not getting your keys on time.
Closing day is exciting. And knowing the ins and outs of wiring money makes it much easier.
To learn more about PenFed loans or what loan is right for you: