Funds are paid at closing almost entirely by wire transfer or cashier’s check, sent to the settlement agent for the exact amount shown on your Closing Disclosure. Your lender must deliver that disclosure at least three business days before closing, so you know down to the dollar what to bring and have time to move the money.1Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs Once the settlement agent has your funds and the paperwork is signed, that money is split among the seller, the seller’s mortgage lender, real estate agents, the title company, and the local recording office, often within hours.
What Settlement Agents Will Accept
Settlement agents accept only payment methods that are verified and irrevocable before the deed is recorded. In practice that means two options.
A wire transfer moves money electronically from your bank to the settlement agent’s escrow account through the Federal Reserve’s Fedwire system. Most banks charge roughly $25 to $35 for an outgoing domestic wire, though some online banks and brokerages charge nothing. A wire sent before your bank’s cutoff typically arrives the same business day, and the settlement agent can confirm receipt within hours.
A cashier’s check works differently. Your bank pulls the funds from your account when it issues the check, so the check is backed by the bank rather than your personal balance. Fees at major banks run about $8 to $15. You hand-deliver the check at the closing appointment, and the settlement agent verifies it with the issuing bank before proceeding.
Personal checks, credit cards, and physical cash are not accepted. Personal checks can bounce. Credit card payments can be reversed through chargebacks. Cash above $10,000 triggers a mandatory IRS Form 8300 filing, which is one reason settlement agents avoid it entirely.2Internal Revenue Service. Reference Guide on the IRS/FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business
Cryptocurrency is not an option either. Fannie Mae explicitly prohibits virtual currency from being used even as an earnest money deposit.3Fannie Mae. Virtual Currency If you’re converting crypto to fund a purchase, do it well in advance so the cash sits in a traditional bank account with a clean paper trail before closing.
Same-Day ACH
Some settlement agents will take a same-day ACH transfer, which carries a per-payment cap of $1 million.4Federal Reserve Services. Same Day ACH Resource Center Fees are usually lower than a wire, but processing is slower and not every title company allows it. Ask before you plan on it.
Figuring Out the Exact Amount to Bring
The number that matters is the “cash to close” figure on your Closing Disclosure. It combines your down payment, loan origination fees, title insurance, prepaid homeowner’s insurance, and prorated property taxes, with any earnest money deposit credited back against the total.5Fannie Mae. Earnest Money Deposit Property taxes are split between you and the seller based on the day of year the sale closes.
Compare that disclosure against the Loan Estimate you received when you applied. If certain key terms change after the disclosure is delivered, such as the APR becoming inaccurate, a new loan product being substituted, or a prepayment penalty being added, the lender must send a corrected disclosure and the three-day clock resets.1Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs
One line item is easy to miss. If your lender requires an escrow account for taxes and insurance, federal law lets your servicer collect a cushion of up to one-sixth of the estimated total annual escrow payments on top of the initial deposits.6eCFR. Part 1024 Real Estate Settlement Procedures Act (Regulation X) – Subpart B On $6,000 of combined annual bills, that’s another $1,000 in your cash to close.
Getting the Money There on Time
Most closing-day problems come from money that arrives late or in the wrong place. A missed bank cutoff or a wrong digit in a routing number can push the closing to the next day.
Wiring Funds
The Fedwire system operates from 9:00 PM Eastern the prior evening through 7:00 PM Eastern on business days.7Federal Reserve. Expansion of Fedwire Funds Service and National Settlement Service Operating Hours Your bank’s internal cutoff will be earlier, sometimes hours earlier, and a wire initiated after that internal window won’t process until the next morning. Confirm your bank’s cutoff before closing day.
You can initiate the wire online through your bank’s authenticated portal or in person at a branch. You’ll need the settlement agent’s bank name, routing number, account number, and a reference or file number. Check every digit twice. Once the transfer is confirmed, your bank will give you a federal reference number; call the settlement agent with it so they can watch for the funds on their end.
Getting a Cashier’s Check
Request the check from your bank at least a day before closing. It must be made payable to the settlement agent or title company for the exact amount on your Closing Disclosure. A check for the wrong amount can’t be accepted, and you’ll be scrambling for a replacement or a last-minute wire. The settlement agent verifies the check’s authenticity with the issuing bank at the table.
Protecting the Wire from Fraud
Wire fraud aimed at homebuyers is one of the most damaging scams in real estate. Criminals compromise the email accounts of agents, lenders, or title companies and send buyers fake wiring instructions that look almost identical to the real ones. Once the money settles in the criminal’s account, recovery is extremely difficult.
Before you send a wire, call the settlement agent at a phone number you found independently, not one taken from an email, and verbally confirm the bank name, routing number, account number, and reference number. Treat any last-minute change to wiring instructions as suspicious, especially one that comes with urgency. Title companies and lenders rarely change banking details mid-transaction.
If you think a wire was misdirected, act within hours. Call your bank and ask it to initiate a recall. Notify the settlement agent and the receiving bank. File a report with the FBI’s Internet Crime Complaint Center (IC3) and your local police. Funds reported within the first 24 to 48 hours have a far better chance of being returned.
How the Settlement Agent Distributes the Money
Once your funds arrive and documents are signed, the settlement agent splits the money according to the Closing Disclosure. The largest outgoing payment usually goes to the seller’s existing mortgage lender to release its lien on the property. What remains after that payoff is the seller’s net proceeds, sent by wire or check.
Real estate commissions come out of closing funds too. Historically, sellers paid a combined 5% to 6% of the sale price, split between the listing and buyer’s agents. Since August 2024, sellers are no longer required to offer compensation to the buyer’s agent through the MLS. Buyer’s agent fees are now negotiated separately between the buyer and their agent, so know before closing day whether you owe your agent directly.
Other disbursements from the escrow account typically include:
- Recording fees paid to the county to record the deed and mortgage, which vary by jurisdiction.
- State or local transfer taxes on the change of ownership, where those apply.
- Title insurance premiums for the owner’s and lender’s policies.
- Attorney fees in states that require an attorney at closing.
- Prorated property taxes, HOA dues, and utility costs divided between buyer and seller based on the closing date.
Wet Funding vs. Dry Funding States
Not every closing disburses on the day you sign. About nine states, including California, Arizona, and Washington, follow “dry funding” rules: you sign at closing, but funds aren’t released to the seller until all paperwork is reviewed and approved, sometimes a day or two later. Every other state uses “wet funding,” where the seller is paid on closing day or within two business days. In a dry-funding state, the delay is normal, not a sign of a problem.
One Wrinkle if the Seller Is Foreign
If your seller is a foreign person or entity, the Foreign Investment in Real Property Tax Act makes you the withholding agent. The default rate is 15% of the total sale price, meaning on a $400,000 purchase, $60,000 goes to the IRS instead of the seller. Two exceptions cut that back. If you’re buying the property as your personal residence and the sale price is $300,000 or less, no withholding is required. If the price is above $300,000 but not more than $1,000,000 and you plan to live in the home, the rate drops to 10%.8Office of the Law Revision Counsel. 26 U.S. Code 1445 – Withholding of Tax on Dispositions of United States Real Property Interests
The settlement agent handles the mechanics, but the legal obligation is yours. If the withholding isn’t collected and remitted, the IRS can come after you for the amount plus penalties. Ask directly early in the process if you have any reason to think the seller is not a U.S. person.