You’ve finally made it to the end—just two more steps! The final step before closing involves parting with your hard-earned dollars: it’s time to pay the down payment and closing costs.
What to Expect:
The morning before closing, your mortgage lender will email you an estimate of your down payment and closing costs. Closing costs typically range from 2% to 3% of the purchase price. For example, if you’re buying a $1 million property and putting 20% down, you’ll be expected to transfer approximately $232,000. This includes:
- $200,000 for the down payment
- $30,000 for closing costs
- An additional $2,000 for any potential discrepancies in the closing cost estimates.
You generally won’t receive the exact amount until the morning before closing, and the funds must be transferred that same day (i.e., the day before closing). Your mortgage lender or attorney will also send you wire transfer instructions, including the account number where you’ll need to send the funds.
Steps for Wiring the Funds:
- Plan Ahead for the Wire Transfer: You’ll need to visit your bank to complete the wire transfer. Make sure you know your bank’s cut-off time for same-day transfers. While your bank might be open until 8 p.m., the cut-off for wire transfers may be as early as 3 p.m. So, make sure to handle the transfer before that time.
- Verify the Instructions: Be extra cautious when transferring funds. Only follow wire transfer instructions sent via password-protected or encrypted email from the escrow closer at the Title company—not from your Realtor or attorney. There has been a rise in scams where hackers infiltrate Realtor or attorney emails and send fraudulent wire transfer instructions, hoping to divert your money into their accounts.
- Confirm the Wire Transfer Details: Before transferring any funds, always call the escrow closer directly to confirm the wire transfer instructions. Do not use the phone number in the email, as it may be fraudulent. Instead, search for the closer’s phone number online or ask your attorney for it, and contact them to confirm the details.
- Notify Us: After sending the wire transfer, email our team, your mortgage lender, and your attorney to ensure that the Title company has received the funds. This is important to confirm that everything is on track for closing.
After the Transfer:
At the closing, you’ll receive a refund check for any overpayment on the closing costs. The Title company will refund the difference if you transferred more than required.
Final Reminders:
- Wire the funds on time (the day before closing) to avoid any delays.
- Be cautious about wire transfer instructions and confirm them directly with the escrow closer to protect your funds.
- Don’t worry, you’ll be refunded if you overpaid on closing costs.
Once the wire transfer is completed and everything is in place, you’ll be ready for closing!