How to Wire Funds for Closing

How to Wire Funds for Closing

The big day is almost here. Soon you'll sign papers and get the keys to your new home.

Before closing, the funds for your down payment and closing costs need to be ready. Sometimes a certified or cashier's check is accepted, but many companies prefer a wire transfer for house closing. Here's what you need to know about wiring money for closing, including how it works, timing, and how to keep your funds safe.

What is a wire transfer?

A wire transfer, or money wire, is an electronic transaction that you can use to send money from one financial institution to another. Like automated clearing house (ACH) transfers, wire transfers are a convenient way to send money without exchanging cash.

You've likely used ACH transfers for everyday needs such as paycheck direct deposits, online bills, and person-to-person (P2P) payments through mobile financial products. Wire transfers are less common and typically reserved for larger transactions that need to be made quickly.

Who receives the wired funds?

Typically the funds are sent to your closing agent. Depending on your location, this person may be called a title agent, settlement agent, escrow agent, or closing attorney. They'll provide the instructions for wiring money for closing including how much to wire and where to send it. Once the funds are received and all paperwork is signed, they'll distribute the money to the appropriate parties.

How do you wire money to a title company or other closing entity? To send the wire transfer for closing to a title company, once you receive the instructions from your closing entity, contact your credit union or bank (wherever the funds are coming from) to find out their wire procedure. You'll be asked to provide specific details, such as:

• The amount to transfer
• Your account number to withdraw the funds from
• The recipient's contact information such as name, address, and phone number
• The routing number for the recipient's financial institution
• The recipient's account number to deposit the funds

Some financial institutions require you to initiate a wire transfer in person. Most can assist you over the phone or provide instructions to wire funds online.

How do wire transfers work?

Wiring funds for closing is often required because it's a fast and secure method for sending and receiving large payments. Not all ACH services or payment apps will handle the amounts common in house closings. While that's an important difference behind the scenes, the process on the front end is similar to any other transfer. Here are the basic steps for wiring funds for closing:

1. The person receiving the funds provides the person sending them with their financial institution's routing number for wire transfers along with the account number to which the funds will be deposited. Note that a financial institution's wire transfer routing number is typically different from its other routing numbers.
2. The person sending the funds provides this information to their bank or credit union.
3. The bank or credit union deducts the funds from your account and credits the recipient.

When do you wire money for closing?

You will receive a closing disclosure at least three business days before you're scheduled to close. The disclosure will include the final dollar amount required at closing. Wire your money one to two days beforehand to ensure the funds are received by closing day. You can always confirm the amount and timing with your loan officer.

How long does it take to wire money for closing?

Mortgage wire transfers are the preferred way to send closing funds because the money often arrives within 24 hours. However, delays are possible due to many different factors including errors on the instructions or federal holidays. Give yourself a cushion to ensure the funds arrive in time and to avoid undue stress.

Can I wire funds the day of closing?

It's not recommended to wire money on closing day. Although wires can go through within hours, there's no guarantee the funds will be available on time. That could lead to delays, and possibly not getting the keys to your new home in hand.

How do you wire money safely?

It's important to know that a wire transfer can't be reversed once a recipient receives the funds. Unfortunately, that means wire transfers for mortgages are heavily targeted by cybercriminals. Remember these tips to keep your transaction safe:

• Follow your loan officer or closing agent's instructions exactly. If you receive any last-minute changes, call them at their main number to ensure the message came from them and not a scammer.
• Call the closing agent right before you transfer funds to confirm the instructions.
• Once the money is transferred, call again to let them know you sent the wire.

What is phishing?

A common way fraudsters try to lure homebuyers into sending funds to the wrong place is through phishing scams. Here's an example:

• You receive an email, phone call, or text message from someone claiming to be your closing agent or lender with instructions for wiring money.
• Believing the information is legit, you send your funds to the location provided.
• The money is sent to the criminal. By the time you realize it was a scam, it's too late to get it back.

The phishing emails and websites are very convincing, looking exactly like legitimate ones. That's why it's important to never click on links or call the phone number in an email giving you conflicting wire instructions. Instead, contact your loan officer or closing agent directly.

Still have questions?

A wire transfer for house closing is often a borrower's first introduction to this form of payment. Don't be afraid to ask if you have questions about when, where, or how to wire money to a title company. Your lender is here to help.

Want to keep learning? Find more resources in the Mortgage Knowledge Center.