Step 22 - Get your Down Payment Ready

Time for the Down Payment

As your closing date approaches, it's time to prepare your down payment. Remember that in addition to the down payment, you'll need approximately 4-6% of the purchase price available in cash for the closing costs. If any of these funds are going to be gifted to you from a family member, it's important to inform your mortgage lender right away so they can obtain approval from the underwriter for the funds.

It's best if the down payment and closing cost funds are transferred into one account, which must be disclosed to your mortgage lender. One business day before your closing date, either your mortgage lender or attorney will email you a close estimate of the amount of money needed to close as well as the wire transfer instructions. Amounts under $50,000 can be paid with a cashier’s check, while amounts over $50,000 should be wire transferred. They will also ask you to transfer extra money, usually $1,000 – $2,000 on top of the estimate, just in case there are any surprises or mistakes found at closing regarding the numbers. You'll wire transfer these funds in one lump payment the DAY BEFORE CLOSING. These funds must be wire transferred the day before closing at the latest, as the Title company cannot accept them on the day of closing unless it is in the form of a certified/cashier’s check.

While it would be ideal to wire transfer the funds several days in advance, often the title company doesn’t have the exact figures until the day before. Therefore, call your bank now and find out what you need to do to make a wire transfer. Most of the time you have to go into the bank personally to initiate the wire transfer. Also, find out what their cut-off time is for wire transfers, usually around 4 pm. Once you've done the wire transfer, email your attorney and mortgage lender so they can ensure the title company receives the funds.

Lastly, explain to your job that you need to leave for a little while the day before closing to initiate the wire transfer and make sure that is OK with them.

At closing, any overage/extra money you paid will be refunded back to you at the very end of the closing via a check.

IMPORTANT NOTE: There has been an increasing number of hackers and scammers lately.  They deliberately try to divert (ie. steal) closing funds to their accounts and away from the title companies. Most often, the wire transfer instructions will be emailed to you from the title company, however, occasionally they will be sent to you by your attorney or me. DO NOT FOLLOW TRANSFER INSTRUCTIONS SENT FROM ANYONE ELSE. ONLY FOLLOW THE WIRE TRANSFER INSTRUCTIONS SENT TO YOU BY ME, YOUR ATTORNEY OR THE TITLE COMPANY.  It is important to verify that the wire transfer instructions you received are legit by calling the title company and they can verify them with you via phone.