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paying for closing costs

Paying closing costs: What kind of check do you need?

By Shelley Sines

June 2018
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It can be easy to overlook one of the last details of purchasing a home: Paying closing costs. If they haven't been rolled into your mortgage loan or paid by the seller, your closing costs will require a separate form of payment due at the loan closing event.

A personal check won't cut it

However, paying closing costs isn't as easy as simply writing out a check from your personal bank account, because the seller has no way of knowing your account can cover the amount. Cash would be impractical (can you imagine how long it would take to count out several thousand dollars?), and title and escrow companies won’t accept it anyway. 

Instead, the method of payment needs to carry a little more weight — it must be a “guaranteed” form of payment that assures the payee that the check is good for all those thousands of dollars. Typically, you'll need to secure a cashier’s or certified check. It should only take a few minutes to have your bank draw one up for you, provided the funds are already in your account, but you'll want to do this a few days in advance of your closing date in case you run into any issues. 

These 2 types of payment are similar but have a few key differences.

Paying closing costs with a cashier’s check

A cashier’s check is drawn on the issuing bank’s escrow account, so the funds are guaranteed by the bank. The funds are moved from your account (or handed over in cash) and placed in the bank’s escrow account. The bank then creates a check written out to the payee. When the check is paid out, the money is withdrawn from the bank’s account.

Paying closing costs with a certified check

A certified check is a payment for funds that have been verified as “good” by the bank. The bank also verifies that your signature as the payee is legitimate. The funds are set aside by the bank so they can be used to pay the certified check once it’s cashed. The bank will typically add its own stamp and signature to a certified check, along with conditions (like how long the check is good for).

The takeaway

Likely either a cashier's or certified check will be an acceptable for paying closing costs, since they're both guaranteed funds. Your closing officer or lender should provide you with specific instructions regarding what form of payment to bring to your loan closing, as well as the amount of money you owe.

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Shelley Sines has been writing for MGIC since she graduated from college in 2007. Currently raising a sweet little family with her husband in the suburbs of Milwaukee. Happiest when cooking or gardening. Competitive Scrabble player. Enthusiastic about road trips, wine, good TV.