What are the pros and cons of wire transfers vs cashier's checks for closing funds? (2024)

FAQs

What are the pros and cons of wire transfers vs cashier's checks for closing funds? ›

Cashier's checks cost less, but may not be accepted for amounts over $10,000. Wire transfers can move money in hours instead of days, are preferred when large sums are being transferred, and are less subject to scams, but also cost more.

You can also make larger payments, whereas some banks limit how much you can send by cashier's check. You may also need to wire money for closing if you're buying a property abroad. However, if you're making a smaller payment – or you prefer a physical payment method – a cashier's check may be the best option.

Advantages and Disadvantages of Wire Transfers

Moreover, they are also reliable: While checks can bounce, a wire transfer can only be initiated if the sender has sufficient funds in their account. However, there are some drawbacks. Banks often charge a flat fee for wire transfers, which can range between $15 and $50.

Cashier's checks have more security features, such as a watermark and a signature from at least one bank employee. They tend to be a better option for large transactions. However, a cashier's check requires a little extra work: You'll need to request one at your bank or online.

When closing on a home, you'll need to provide certified funds—in other words, a personal check won't do. Title companies and other closing agents usually accept wire transfers and cashier's checks, but the best option for you depends on your situation and the closing agent's guidelines.

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.

You can ask your bank to do a wire transfer in person, over the phone or online. A wire transfer is a great option if you can't make it to the bank in person before closing. Most banks use a service called Society for Worldwide Interbank Financial Telecommunication (SWIFT) to complete wire transfers.

Scammers know that once you wire money to them, there's usually no way to get your money back. Scammers can quickly pick up your money at any of the wire transfer company's locations throughout the world. And, it's nearly impossible to identify who picked up the money or track them down.

Wire transfers are transactions initiated by authorized personnel between two banks or financial institutions. That's why they're considered very secure, especially when you compare them to sending a check in the mail. Most wire scams involve the scammer baiting you into action.

What can go wrong with a cashier's check? ›

If the check shows it was purchased by someone else, not the person you are dealing with, or if the check doesn't have the look or feel of a real check, contact the bank to check its validity. It might be counterfeit.

Recipients may prefer cashier's checks because: They're almost equivalent to cash, but the risk of theft is lower because only the payee can deposit a cashier's check. They're guaranteed. Unless a cashier's check is fraudulent, there's almost no risk that it will be declined, or "bounce."

Differences between a cashier's check and a certified check

While both offer security, a cashier's check involves the bank's direct liability, whereas a certified check relies on the payer's available funds.

Cashier's checks are typically used for larger purchases. 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.

Determining your Total Cash to Close

To be prepared for the total number, speak with your mortgage lender to get an estimate about how much you will owe in closing costs. When you do get your Closing Disclosure, review the final expenses, and ask questions about any changes that you don't understand.

A cashier's check is a paper transaction. Once you have deposited a cashier's check to your bank account and it has cleared you can do with the funds as you wish, including transferring the money by wire to another account.

Compared to putting a check in the mail, wire transfers are much safer. The bank asks you to provide information about the payment receiver, their business or personal information, and the source of your funds for fraud-prevention purposes.

Wire transfers are transactions initiated by authorized personnel between two banks or financial institutions. That's why they're considered very secure, especially when you compare them to sending a check in the mail. Most wire scams involve the scammer baiting you into action.

Money orders are secure payments since they do not include any personal information. But they have one major drawback: The amount of a money order is often limited to between $700 and $1,000. Another option is to use a certified check or a cashier's check, which do not have limits.

Recipients may prefer cashier's checks because: They're almost equivalent to cash, but the risk of theft is lower because only the payee can deposit a cashier's check. They're guaranteed. Unless a cashier's check is fraudulent, there's almost no risk that it will be declined, or "bounce."