Cashier's Check or Certified Check for Closing: A Guide for Homebuyers

A cashier's check or certified check is a secure way to pay for a home, but which one is best for closing? A cashier's check is a check drawn on a bank and paid from the bank's funds, while a certified check is a check that has been guaranteed by the bank, meaning the funds are already available.

To use a cashier's check for closing, you'll need to visit a bank in person and request a cashier's check for the full amount of the purchase price. The bank will then issue a check that can be used to pay for the home.

The advantage of using a cashier's check is that it can be used to pay for a home quickly, as it's a guaranteed payment.

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A cashier's check or certified check is a safer option for closing than carrying a large sack of cash. This is because transactions in excess of $10,000 in cash must be reported to the Internal Revenue Service.

You can get a wire transfer or a cashier's check for closing. A wire transfer is the safest option, but it can be more expensive than a cashier's check.

To get a cashier's check for closing, check with your bank or credit union beforehand. You might have to deposit the funds with the closer the day before closing.

A cashier's check is a check issued by your bank that guarantees the payment of a specific amount of money. It's safer than a personal check, as the funds are drawn from the bank's account, not yours.

Here are the types of checks you can use for closing:

You should get your cashier's check no more than 1 day before closing. This is because closing figures may change last minute, and carrying a large check is risky.

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Using certified funds for closing can be a bit tricky, and one potential issue is that the buyer may not have the liquid funds to complete the transaction, despite having a pre-approval letter stating that "funds have been verified".

This can happen if the buyer's financial situation changes between the pre-approval and closing, or if the lender's verification process is incomplete.

However, with a reputable lender, this risk can be minimized, as they will verify the buyer's liquid funds before issuing a pre-approval letter.

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Verifying closing funds is a crucial step in the home buying process. It ensures that the buyer has the necessary funds to complete the transaction and prevents potential fraud.

To verify closing funds, you need to ask the buyer to provide a copy of the check or money order before the closing date. Compare it with the original document when you receive it.

Contact the issuing bank or institution to verify the validity, amount, and availability of the funds. Use the phone number or website listed on the check or money order, not the one provided by the buyer.

Deposit the check or money order as soon as possible, and wait for the funds to clear and be available in your account. Don't rely on the bank's provisional credit or the receipt as proof of payment.

In Texas, the title company provides information to the agents about the funding of the transaction until the title company confirms "funding" of the transaction. Until then, keys are generally not transferred to new owners.

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Here's a summary of the steps to verify closing funds:

Get your cashier's check no more than 1 day before closing to avoid any last-minute changes in closing figures.

Obtaining certified funds can present problems, as some financial institutions require advance notice before they'll withdraw a large sum of money and give it to you.

Cashier's checks can be altered by crooks or used in scams, which can affect the recipient's end of the bargain.

You may need to wait for a cashier's check to clear, which can take several days, during which time the recipient may not have access to the funds.

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Getting certified funds ahead of time may seem like a good idea, but it can actually lead to more problems than you'd expect.

Carrying around a large cashier's check is risky, and if lost or stolen, it can be very difficult to cancel and reissue a new one. The bank will likely make you wait several days or weeks before they'll reissue the funds.

Closing figures can change up until the last minute, so getting the check too early means you may have to get a new one issued. This can be a hassle, especially if you're already dealing with a lot of paperwork and stress.

Checks expire after 90 days, which can be a problem if there are any delays in closing. An early check may expire before it can be used, forcing you to get a new one.

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A cloud is essentially a remote storage system that allows you to access your files from anywhere, just like how a bank verifies upfront that it has the cash to back a cashier's check.

This makes a cloud more secure than storing sensitive documents on a personal device, which could be lost or compromised.

For a real estate closing, a cloud can be used to store and share documents, such as the CD (Closing Disclosure form), to ensure all parties have access to the same information.

A cloud ensures that the documents are safely stored and can't be altered or deleted, much like how a cashier's check ensures the buyer has the funds available for the sale to close smoothly.

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A cashier's check is a safer option than a personal check, as the funds are drawn from the bank's account, not yours.

In Texas, title companies require either a cashier's check or a wire transfer for closing funds, with a personal check only allowed for amounts under $1200-$1500.

You can use a cashier's check or a money order for large or guaranteed payments, as they are considered more secure than personal checks.

Closing agents require certified funds for several reasons. One major concern is the liability associated with large amounts of cash. Transactions in excess of $10,000 in cash must be reported to the Internal Revenue Service.

To avoid this hassle, a wire transfer or a cashier's check are the safest options. You should check with your bank or credit union before you need the money, and be prepared to deposit the funds with the closer the day before closing.

Title companies, escrow officers, and other closers can't record a deed until the equivalent of cash is in hand. They promise that the seller will receive the money when the deed is recorded, and they promise to record the deed when the buyer deposits the money.

Funds received via wire transfer can often be paid out immediately, but funds received via cashier's check must be deposited the day prior to disbursement. Funds received in any other manner will delay disbursement.

Here's a quick rundown of the safest options:

Keep in mind that the laws for this process can vary from state to state, but funds must often be deposited and available prior to disbursement.

Get your cashier's check no more than 1 day before closing to minimize risks. This allows time to go to the bank and get the check without any issues.

Closing figures may change last minute, making it risky to carry a large check. Same-day is ideal if possible, but schedule a bank appointment 1-2 days ahead to get the certified check.

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Same-day is even better if possible, but getting it no more than 1 day prior to the closing date is a safe bet. This gives you time to go to the bank and get the check without any last-minute stress.

Here's a quick summary of the ideal timeframe:

If you're looking for alternatives to certified funds, there are a few options to consider.

A cashier's check or a money order are two common alternatives, especially if the amount is large or the seller requires a guaranteed payment. Both of these options are considered more secure than personal checks, because they are backed by the issuer and not by the buyer's account.

In Texas, title companies require either a cashier's check or a wire transfer, no other form can be used unless the amount is under $1200-$1500, in which case a personal check can be used.

Cashier's checks and money orders can be purchased from various sources, such as the post office, a convenience store, or a money transfer service.

Here are some key differences between cashier's checks and money orders:

When buying a home, you'll need to pay closing funds to the seller and other parties involved in the transaction. This amount usually includes the down payment, closing costs, and any prepaid items like taxes and insurance.

The buyer may need to provide the closing funds in a specific form, such as a cashier's check, money order, wire transfer, or certified check. Jeanenne Kienle, a Real Estate Associate Broker at Berkshire Hathaway HomeServices, recommends starting with a reputable lender to verify the buyer's liquid funds.

The lender will issue a pre-approval letter stating that "funds have been verified." Once the transaction receives a "clear to close", the buyer can provide a cashier's check made out to the title company or wire funds prior to closing.

Here are the acceptable forms of payment for closing funds:

Remember to check your contract and state laws for specific requirements on the form of payment.