Wire Transfer vs. Cashier's Check
Updated: Aug 2, 2021
It's almost time to close on your first home and you are told that you will have to bring money "to the table" (the closing table that is) in order to close. Now, your Mother's Sister's Aunt's Best Friend from down the street has informed you that you can just write a check for that amount at closing and the Closing Attorney will take it. Well that person would be wrong, so very wrong, but don't try and tell her that.
Here's what you need to know. There are three ways to bring funds to a closing, either personal check, Cashier's Check, or Wire Transfer, and there is only one actual way that we want you to get the funds to us, the Closing Attorney. The way that we want you to transfer funds which is the safest for you and for us is via Wire Transfer. Here's why.
A personal check is for non-certified funds. When the party that accepts the check accepts it, they either have a way of verifying your account value or they are accepting the money in good faith that you have the funds in your account. What most people don't realize is that it takes anywhere from three to ten days for a personal check to clear the bank that holds the account of the person who wrote the check. So if you bring a personal check to closing and the attorney accepts it, those funds are not immediately available to be used to buy your home and the attorney is not going to "loan" you the money in the hopes that the check will clear in three days and they will get paid back.
You might be asking why you were told by your Realtor that you could bring the Earnest Money check on a personal check? Well this is completely different, the closing attorney who is holding the money will deposit the check and it will have more than the needed 3 days to clear the account before closing, so accepting this will not delay the closing.
This is a check that is drawn upon certified funds, which means that you must go to the bank and the bank teller will verify that the funds are in your account. The teller will then draft a check for the amount requested and will provide it to you. If you walk into a closing with a Cashier's Check then your closing is still going to be delayed because it will still take a day, sometimes longer, for that check to be deposited with the Closing Attorney's bank and for the funds to clear, so this is still not the preferred way of bringing funds for closing.
The Wire Transfer is often talked about as the instantaneous transfer of money. It is quick, but don't be fooled into thinking it is instantaneous. There are several steps that go into the transfer of wired funds. First, the account holder usually needs to go to their bank and provide the amount to be wired and the wiring instructions for the person receiving funds to the bank representative. They will verify the funds in your account and initiate the wire. What most people don't know is that there is a second person at the bank, usually in some management position, who will review the wire transaction before it is approved to be sent. Once it is sent, it can take an hour or two for the receiving bank to "accept" the wire, this is because the receiving bank has procedures in place also to verify the wire as it comes in. Once it has been "received" by the bank then it is posted to the closing attorney's account and we can let all parties know that we have the funds.
So while not instant, it is still in the account of the closing attorney and verified within a few hours of sending and this is a good thing because it means the closing attorney can send the funds to the buyer the same day and finish the transaction. This is the best possible outcome so that you, the Buyer, will get possession of your new home the same day as your closing.
Simple enough, well if you still have questions please contact me.
If you feel that this information may help you or a client, please reach out. It is my mission to help others.
Jeremiah L. McGuire