What Electronic Funds Payment Is and When You'll Use It
Electronic Funds Payment (EFP) is a method of moving money directly from one bank account to another without writing a check or handling cash. In a home purchase or sale, you use EFP to send the down payment, closing costs, earnest money, or the final purchase price to the title company, escrow agent, or lender. The money moves through the banking system in hours or days rather than weeks.
You'll encounter EFP at closing when you need to wire funds to cover your down payment and closing costs. Your lender or title company will give you specific wiring instructions — the receiving bank's name, account number, and routing number — and you'll initiate the transfer from your own bank. Unlike a check, which can bounce or get lost in the mail, EFP is faster and leaves a clear digital trail.
Key Takeaways
- Electronic Funds Payment moves money directly between bank accounts and is the standard way to transfer down payments and closing costs at real estate closing.
- Your lender or title company provides the wiring instructions, and you initiate the transfer from your own bank — never send money based on instructions you find online or receive by email without confirming them by phone.
- The transfer typically clears within one business day, but you should send funds at least two business days before closing to account for delays.
- Verify the receiving account details by calling the title company or lender directly using a phone number from your closing documents, not from an email.
How the Payment Process Works at Closing
Your lender or title company will send you wiring instructions, usually in an email or closing disclosure document. These instructions include the receiving bank's name, the account number, the routing number, and sometimes a reference number or loan number to include in the wire. Read these carefully and do not assume they are correct just because they came from an official-looking email.
Log into your bank's website or call your bank directly and request an electronic wire transfer. You will enter the receiving bank's routing number, the account number, and the amount. Your bank may charge a wire fee, typically $15 to $30. Once you submit the wire, your bank will send the funds through the Federal Reserve's wire system or through a private clearing network. The receiving bank usually credits the account within one business day, though some transfers take longer if they cross time zones or involve smaller banks.
Keep a record of the wire confirmation number your bank gives you. This is your proof that you sent the money and when. Bring it to closing or have it ready to show your lender if there are any questions about whether the funds arrived.
Timing: When to Send Your Funds
Send your funds at least two business days before your closing date. If you close on a Thursday, send the wire on Tuesday. This buffer accounts for delays in the banking system and gives the title company time to confirm the money arrived before closing day. If the funds do not show up by the morning of closing, the title company can contact your bank to track them down.
Do not send funds on the day of closing. If something goes wrong — a typo in the account number, a system delay, a bank holiday — you will have no time to fix it. Closing can be postponed if funds do not arrive, and you may lose your rate lock or face other costs.
Protecting Yourself From Fraud
Wiring fraud is common in real estate transactions. A criminal may send you fake wiring instructions that look like they came from your title company or lender, with a slightly altered email address or bank account number. If you wire money to the wrong account, it is extremely difficult to recover.
Always verify wiring instructions by calling the title company or lender directly using a phone number from your closing disclosure or other official closing documents — not from the email containing the wiring instructions. Say something like: "I received wiring instructions in an email. Can you confirm the account number and routing number are correct?" The person on the phone can verify the information in real time.
Do not wire funds based on instructions you find on a website, receive in a text message, or get from an email address you have not previously used with that company. If you are unsure, ask your real estate agent or attorney to verify the instructions before you send anything.
What Happens If the Wire Goes to the Wrong Account
If you wire money to an incorrect account number or routing number, the funds may still reach a bank — just not the right one. The receiving bank is not obligated to return the money, and your bank cannot simply reverse a wire the way they can reverse a credit card charge. You will need to contact your bank immediately and file a claim, but recovery is not may provide.
This is why verification by phone is so important. A few minutes on the phone can prevent weeks of trying to recover thousands of dollars. If you discover the error after closing, contact your title company and lender right away. They may be able to help trace the wire or contact the receiving bank on your behalf.
Alternatives to Electronic Funds Payment
Some title companies accept cashier's checks or certified checks instead of wires, though this is less common. A cashier's check is issued by your bank and drawn on the bank's own account, making it more secure than a personal check. You would pick up the check from your bank and bring it to closing or mail it to the title company.
A few lenders still accept ACH transfers, which are slower than wires but cheaper — often free or a few dollars. An ACH transfer can take three to five business days, so it must be sent earlier than a wire. Ask your lender whether ACH is an option for your closing.
What to Expect After You Send the Wire
After you initiate the wire, your bank will deduct the money from your account immediately, even though the receiving bank may not credit it for a day or more. You will see the transaction in your account history with the wire confirmation number. The title company or lender will send you a confirmation once they receive the funds, usually by email or phone.
If you do not hear confirmation by the day before closing, contact the title company to ask whether the wire arrived. If it has not, ask them to help you trace it. Provide your wire confirmation number and the date and time you sent it. Do not assume the wire is lost — it may simply be delayed, especially if it was sent late in the day or on a Friday.
Frequently Asked Questions
Can I wire funds from someone else's bank account?
Most banks require the person initiating the wire to be an account holder or authorized user on that account. If you are receiving a gift from a family member, they will need to wire the funds from their own account, or you can withdraw cash and deposit it into your account before wiring it yourself. Ask your lender whether they have any restrictions on gift funds.
What if I wire the money but the title company says they never received it?
Contact your bank immediately with your wire confirmation number. Your bank can trace the wire through the Federal Reserve system and determine whether it was sent to the correct receiving bank. If the receiving bank has the funds but the title company has not found them, the title company may need to contact their own bank to locate the deposit. This can take a few business days to resolve.
Do I need to wire the exact amount or can I wire extra?
Wire the exact amount the title company or lender requests. If you wire extra, the title company will have to refund the overage after closing, which delays your money. If you wire less, closing will be delayed until you send the remaining funds. Ask for the exact amount in writing before you initiate the wire.
Is there a limit to how much I can wire?
Most banks allow wires of any amount, but some have daily or monthly limits for security reasons. If you are wiring a large amount, contact your bank in advance to let them know. They may ask you to verify the wire in person or over the phone before processing it.
What happens if the wire is sent on a weekend or holiday?
The Federal Reserve does not process wires on weekends or federal holidays. A wire sent on Friday evening may not reach the receiving bank until Monday. This is why sending funds at least two business days before closing is important — it ensures the money arrives even if there is a delay or a holiday in between.