When you are closing on a home, there are a few things that you need to know about how to transfer money and what to bring to the closing table.
The money must be either: 1) Wired to the settlement company prior to closing (preferred) OR 2) Brought to closing in the form of a certified check (so that it is just as good as cash)….DO NOT, I REPEAT DO NOT bring a personal check…you will not close. Also if it is any sum over $10,000 in cash it must be reported to the IRS, so don’t bring cash…either way, it is hard to track cash…just don’t do it
If you are moving money between accounts, make sure to keep a record of how much and from what account to what account. For Example:
You have money in stock that you will liquidate to pay for the down payment and closing costs…once you liquidate it, it is sitting in a money account with the stock management company. You want to move this into your checking account where you will then disburse it to the settlement company. You can do this a few ways…you can write a check from yourself to yourself then make a copy of both the check and the deposit slip then once it has posted save the activity statement showing the deposit. OR you can wire it from yourself to yourself and just save a copy of the completed wire transaction and save the activity statement as noted above. Or…you can just wire the money directly to the settlement company from the stock account.
The reason you need to keep good records of what is going where is because the lender must know where your money is coming from. Some lending programs have limits on whether or not you can accept a “gift” to help with your down payment (and how much). If the lender doesn’t know where the money came from then they will consider it a gift and that could possibly mess up your financing if the lender has these limits and you didn’t tell them you were getting a gift. Additionally, if you are receiving a “gift”, the lender needs to know and there are often “seasoning requirements” meaning the money has to have been in your possession for a certain length of time and there needs to be record of it being deposited into your account. This is something to speak with your lender about when you are discussing the details of your loan…requirements vary from lender to lender, so make sure to ask.
Don’t get caught on settlement day with your pants down…stay in touch with your lender and Realtor and make sure your ducks are in a row. Settlement will be delayed if this stuff isn’t taken care of.
Bring photo identification…they want to make sure you are who you say you are.
Hope this is helpful…:)