Good funds are closing funds accepted as collected and available for timely mortgage settlement and disbursement under applicable requirements.
Good funds are closing funds the settlement party can treat as collected, available, and acceptable for completing and disbursing a real estate transaction.
Good funds matter because a bank balance or payment instruction is not the same as money the settlement agent can safely disburse. A personal check may show available money in the buyer’s account but still require collection time. A wire may be fast, but it must reach the correct verified escrow account and be credited before the closing cutoff.
The term also protects the closing account from paying sellers, lienholders, tax authorities, and other recipients against funds that might be reversed, stopped, rejected, or unavailable. State law, settlement-agent policy, bank timing, payment amount, and transaction type can all affect which forms are acceptable.
Good-funds requirements apply to more than the buyer’s Cash to Close. Loan proceeds and other money entering the settlement account may also need to satisfy the requirements that apply before Disbursement.
Borrowers encounter good-funds instructions shortly before closing when the title company, escrow officer, closing attorney, or other Settlement Agent explains how and when to deliver cash to close.
The instructions may specify an approved bank wire, cashier’s check, certified check, or another method permitted for the amount and jurisdiction. They may also state a deadline earlier than the signing appointment so the agent has time to verify receipt and availability.
Borrowers should independently verify payment instructions using trusted contact information obtained before any last-minute change. A message that substitutes a new account or asks for funds to be redirected is a Wire Fraud warning, not an ordinary good-funds update.
| Payment method | Good-funds issue to clarify |
|---|---|
| Bank wire | Must reach the verified settlement account and be credited by the required time |
| Cashier’s, certified, or official check | Acceptance can depend on amount limits, issuing institution, delivery time, and local rules |
| Personal check | May be rejected or require enough time to become collected funds |
| ACH or other electronic transfer | Is not automatically treated the same as a bank wire and may not satisfy the agent’s requirements |
| Physical cash | May be prohibited, restricted, or impractical under settlement policy and applicable law |
This table describes questions to ask, not a universal acceptance list. The settlement agent’s verified written instructions and applicable state requirements control the actual transaction.
| Borrower check | Why it matters |
|---|---|
| Confirm the exact amount | The final Closing Disclosure or verified update controls the expected funds |
| Confirm the accepted method | A payment method accepted elsewhere may not be accepted for this closing |
| Confirm the delivery deadline | Funds arriving after a bank or recording cutoff can delay completion |
| Verify account instructions independently | This reduces the risk of sending money to an impostor |
| Keep proof of transmission or purchase | The settlement agent may need a wire reference or check details to locate the funds |
| Confirm receipt with the settlement agent | A sent transfer is not necessarily a received and credited transfer |
A buyer must provide $58,000 for cash to close. The settlement agent’s verified instructions require a bank wire received by noon on the business day before signing. The buyer initiates the transfer but initially enters the wrong reference information. The bank sends the money, yet the settlement agent cannot immediately match it to the file. Closing remains pending until the agent verifies and credits the funds. The money existed, but it did not function as usable good funds for this closing until receipt was confirmed.
Good funds differ from Cash to Close because cash to close is the amount the borrower must provide. Good funds describe whether the payment form is acceptable and available for settlement.
They differ from a Wire Transfer because a wire is one method of moving money. A properly received wire may qualify as good funds, but the broader term can include other accepted forms.
They also differ from Funding because funding refers to the lender making mortgage proceeds available. Good-funds requirements address whether money entering the settlement account can be relied on for disbursement.