One logistical challenge in refinancing a mortgage is getting a certified check for the amount you have to bring to the table at the time you sign the closing papers. Even if you are doing a no-cost refinance, you still have to pay pre-paid interest for the partial month and escrow deposit.
If you are using a good low-cost lender, as you should, you often don’t get the final HUD-1 settlement statement until the night before the closing is scheduled, after banks are closed. Sometimes you don’t get it until the day of signing, leaving you very little time to go to the bank and get the certified check.
It caught me off guard a few years ago. I had to resort to a cash advance from my credit card to make it happen. I sure don’t want to do that again.
One option I overlooked until recently is to send a wire transfer to the settlement agent after signing the papers. For a refinance with a different lender, you have a 3-day rescission period. The loan is not going to fund in 3 days anyway. You can take your sweet time in that 3-day window to get your money to the settlement agent with a wire transfer. After you already signed the papers, you know exactly how much you need.
A wire transfer doesn’t have to cost money. If you have the right account at the right place, you get free wire transfers.
Ask your loan officer for wire instructions. They will give you the settlement agent’s bank routing number, account number, name and address on the account, and a set of references to identify the wire as your wire. The set of references is very important. Because they receive many wires in a day, they won’t be able to tell the money is for your file without those identifiers. I was asked to include these on a wire for a refinance:
- property address
- borrower name
- their file number
- name of the person handling my file
Wire Transfer At Fidelity
I do my wire transfers at Fidelity because they have an office near me. It’s easier to explain what you want to do face-to-face and make sure they understand.
Fidelity can do wire transfers online, but the online form doesn’t have a field for those references. You have to use the paper Non-Retirement Redemption Form. Check off option C under section 4 and put those references under "For Further Credit/Additional Instructions." Don’t worry it’s just one line on the form. Write it all down in the space below and tell the Fidelity rep it’s very important to include all of it. They have 4 lines of 35 characters each in the actual wire software they use.
Wire transfers run through the Federal Reserve. Ask the Fidelity rep to call you with the wire reference number after it’s sent. It’s a long string with letters and numbers. Mine came at 18 characters. The reference number will be useful if someone has to look for the wire.
My wire went smoothly. It arrived on the same day I gave the wire transfer form to the Fidelity office. I would use wire transfer at Fidelity again if a similar need arises in the future.
[Photo credit: Flickr user Tim Evanson]
Refinance Your Mortgage
Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Check mortgage rates in your state.