Closing on a home can be an exciting and sometimes nerve-wracking experience. As you prepare for this important milestone, you may have heard about the need for a cashier’s check at closing. In this article, we’ll explore whether a cashier’s check is really necessary and provide valuable insights to help you navigate the closing process with confidence.
Understanding Closing Costs
Before we delve into the topic of cashier’s checks, let’s take a quick look at closing costs. Closing costs are the fees and expenses associated with closing your mortgage loan and transferring ownership of the property. These costs typically include items such as lender fees, title insurance, appraisal fees, and prepaid expenses such as property taxes and homeowners insurance.
The Role of a Cashier’s Check
One of the essential components of closing costs is the cash to close, which refers to the total amount of money you’ll need to bring to the closing table. This includes your down payment, closing costs, and any other required payments. While personal checks are commonly used for everyday transactions, they are generally not accepted for large sums of money at closing.
Instead, many lenders and title companies require a cashier’s check or wire transfer to ensure that the funds are guaranteed and readily available. A cashier’s check is a check drawn on the bank’s funds rather than an individual’s personal account. It is considered a safe form of payment because the bank verifies and guarantees that the funds are available at the time of issuance.
Why cashier’s Checks are Preferred
Cashier’s checks offer several advantages when it comes to closing on a home. First, they provide a level of safety and security for all parties involved. Funds are verified and the risk of insufficient funds or a bounced check is eliminated. This helps streamline the closing process and ensures that necessary payments are made promptly.
Second, cashier’s checks often include security features, such as watermarks, that make them more difficult to counterfeit. This added layer of protection helps prevent fraudulent activity during the closing transaction.
Obtaining a Cashier’s Check
To obtain a cashier’s check for closing, you must visit your bank or credit union in person. Provide them with the exact amount of cash you need to close, as provided by your lender or title company. The bank will then issue the check from their own funds, ensuring that the payment is safe and guaranteed.
It’s important to note that cashier’s checks typically come with a fee, which can vary depending on the financial institution. Be sure to ask about any fees when you visit your bank.
Alternative Payment Options
While a cashier’s check is the preferred method of payment for closing costs, some lenders and title companies may accept wire transfers as an alternative. A wire transfer electronically transfers funds from your bank account to the recipient’s account, providing a secure and efficient way to complete the payment.
It’s important to check with your lender or title company in advance to confirm their preferred payment method and any specific instructions for initiating a wire transfer.
Closing on a home is a significant financial transaction that requires careful attention to detail. While the need for a cashier’s check at closing may seem like an extra step, it is an important one to ensure a smooth and secure transfer of funds. By understanding the role of a cashier’s check and being prepared to obtain one, you can confidently navigate the closing process and take another step toward homeownership.
Remember to consult with your lender or title company for specific guidance tailored to your situation, as requirements may vary.
Do you need a cashier’s check at closing?
Cashier’s Check Instead, you’ll need to provide a cashier’s check made out in the amount you need to pay to cover the cost of closing your loan. Your lender or title insurer will provide this figure before closing day so that you have enough time to secure a cashier’s check.
What happens if I don’t get a cashier’s check?
Unused Cashier’s Check
Inform the teller that you did not use the cashier’s check as planned and you would like to receive the funds back into your account. Allow the teller to mark the check “Not used for purposes intended” and credit your account.
Is a cashier’s check safer than a wire transfer?
At Title Partners of South Florida, we’ve used both wire transfers and cashier’s checks in the past, but like most title companies, we now require wire transfers for all of our real estate closings. They have proven to be the most reliable and safest choice for transferring money at closing.
When should a cashier’s check be used?
Use a cashier’s check when you need to make a large payment and a personal check or credit card isn’t acceptable, and paying with cash isn’t safe or practical. A cashier’s check is a safe, efficient payment method when a large sum of money, generally anything over $1,000, is required.
What is better cashiers check or certified check?
The bank guarantees a cashier’s check—meaning the bank is held responsible if the check bounces. With a certified check, you guarantee the check you write from your account. That makes cashier’s checks safer and potentially slightly more expensive to obtain.
What is the maximum amount for a cashier’s check?
Although the policy may change from bank to bank, generally there’s no upper limit for a cashier’s check. The payee typically has quicker access to a larger amount of the funds with a cashier’s check.
What do I need for a cashier’s check?
To get a cashier’s check at a branch, you’ll just need to: Get your information together. You’ll need the exact name of the payee and the amount for the check. You’ll also need to have a picture ID to verify your identity and any notes you want to include on the check regarding what the payment is for.
Is cashier’s check or wire transfer for closing?
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.
Should you wire money before 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.