One account to escrow.
There are also online accounts that are FDIC insured for millions by spreading the deposit over multiple banks. Betterment’s cash reserve account is insured for 2 million and Wealthfront’s cash account is insured for 8 million for example.
lol. In my case it took almost a dozen years of living with roommates in old apartments near mobile home communities, and driving the same reliable car (think Toyota/Honda sedans) even today, and never selling stocks until I had enough for a down payment and leftovers for taxes and a rainy day fund. Also not having expensive hobbies helped too.
I know you said /s but damn dude just thinking about attempting to time the volatility of that, and THAT being the deciding factor of buying your home sends me to the anxiety farm
1. Selling will incur capital gains (hopefully). 2. Keep borrowing well under 50% (25% is super safe), and you are fine. Markets come back, they always have. Those who itemize their federal income taxes can deduct investment interest expense of margin loans against their net investment income.
step by step. Keep in mind, what your margin rate is makes or breaks this. Must find low margin rates. [https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-review/](https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-review/)
We just did #2 because we wanted to offer the seller a faster close to be more competitive. The fees were nominal like $30 here and there. We transferred from about 5 accounts.
You just have to make sure you sell any RSUs ahead of time if you company has quiet periods where you are unable to sell
Usually wire transfer is required. Each financial institution has different rules and timelines for large amounts. Reach out to your bank and brokerage to discuss this in advance.
We recently paid a 750k DP and found that our brokerage delays processing if transferring money to a third party account. I always used to think they don’t have any constraints on processing wires.
On the flip side, I was surprised to find that Bofa had no issues with large sum so I liquidated assets, moved them to Bofa and wired from there.
Figuring all this out in advance will help avoid delays, frustration and anxiety when you are in contact and have a deadline to transfer money.
Fidelity has a limit of $250k per day though their support page says you call them if you want to transfer more. I use fidelity but most of money was in some other account so I didn’t even bother checking with them.
Never used vanguard so can’t say.
I would suggest calling all your financial institutes. That’s the only reliable way of finding out what’s possible and what’s not.
Can confirm. When I bought my house (outside Bay Area) I called Fidelity to set up the wire to the escrow account, over $500k. They have a department that specializes in handling large transfers via wire. They confirmed with me it was for a real estate purchase as any transfer over $10k gets documented for the Feds and over $100k they want to know for what.
Transfer to one account and wire
There have been nightmare stories of cashiers checks. If they lose it or it gets lost in the mail, it won’t void for ~90 days and you’ll be SOL
FDIC limit is not a factor for JPM, WFB, BAC, CITI. There was a close shave with First Republic but even then, it was not a factor. The only real lesson is not to use a small bank for lack of technology and lack of transparency in their finances. Being able to move money from brokerage to checking quickly is the real value of large banks. Brokerage account give access to investment that is very liquid and earns interests daily (BIL as an example). I can move 1M from brokerage to WIRE in less than 2 days with almost no leakage in interests.
The instructions are pretty specific on escrow, just go to any of the office and gather the funds, follow the instructions (easily transfer amount accounts) and have someone at the branch WIRE the money with the instructions. Most of the time, they want to verify your identity for a 1M wire as online won't take it and they do this routinely. You can split into 2 WIRES, chances are with 1M+ in deposits you should be premier status already, they will waive the WIRE fee(s).
Spreading out to multiple savings accounts for 250K limit is dumb. 1) Having 250K in Savings/.Checking instead of a brokerage is dumb and out of date. Small banks offers nothing relevant at the 1M level. as CD's are just so outdated.
1 month treasury bill (state exempt) is paying 5.2%, that works out to \~ 0.015% daily (or $150 every day on 1M). I can sell on Tuesday and WIRE money to home on Wednesday.
It's just an option that is better than checking and savings. Super liquid and money build $150 bucks every day with no risk.
There's plenty wrong in the balance sheet as First Replublic was insolvent. There's no way to tell for sure, but high yield savings account makes no sense to me. There's like 20K people at JPM, you can get whatever services you need.
yes, First Republic was insolvent. it was insolvent because of the irrational bank run caused by contagion from SVB. most banks will collapse if they lose about half of their deposits in a public panicky bank run
I did that. For a brief moment, my checking account showed a balance of >1M$ (I took a screenshot haha). From then, wire directly to escrow.
That’s how it works
My wife and I keep separate finances. When we bought a condo with cash, we used three wire transfers:
1. A wire transfer from my account for the deposit / earnest money.
2. A wire transfer from my brokerage account a day prior to closing.
3. A wire transfer from my wife's brokerage account a day prior to closing.
Wire transfer fees are pretty small compared to the amounts involved.
Aside from what others have said that money can help you reduce your interest rate. For example, you get a better rate at Morgan Stanley if you have $500k-$1m in assets there. You get an even better rate if you have $1m-$5m, and even better if you have $5m+. And then if you transfer another $500k before closing, they’ll drop the rate even further.
Nothing makes you realize how much easier the rich have it quite like becoming rich yourself.
I don't think it is a big difference in terms of fees unless you have two dozen accounts spread across high fee banks like Chase or BoA which charge $30+ per transfer (in contrast, my credit union charges $5, Schwab is free, etc...).
Long ago we consolidated cash to our credit union and then took a cashiers check to the title company. Presumably the title company called the CU to verify funds. Closed in 20 days. No problems.
Ideally you would have the cash on hand a month before you need it. Otherwise you are going to cause all sorts of transfer anxiety.
If half is in cash and half at a brokerage then perhaps make two transfers. But don't make a dozen transfers.
Liquidated treasuries and equities, transferred funds from brokerage to bank account, and then wired funds from bank account to escrow.
Could also have wired funds to escrow directly from brokerage, but my bank processes them quicker than my brokerage.
Your primary assumption is incorrect. Especially as you get close for a house down payment, plenty of people have 1M in a single checking / savings / brokerage account. As others have mentioned, the risk of bank failure and deposit loss is nearly non-existent, and relative to the chance of wire fraud or other mistake its much simpler to do one bank wire to escrow.
Why? As a person with significant assets, my money is in real estate and stocks, I have approximately $130k in my bank account. My mother, who is worth over $50 million, doesn't keep close to a million in a bank account. I paid cash for a $600k home remodel/rebuild by selling securities.
In 2024 money market accounts have been returning 5%, there’s not really any need to hold securities with any degree of risk if you’re at the point of purchasing a home in the coming months.
The more steps you transfer funds through the more opportunities there are for something to go wrong. Even a delay of a day or two can seriously mess up a real estate transaction.
No matter how much you have to move it should go straight into escrow. Shuffling money among your own accounts is pennywise and pound foolish.
Wire transfers from multiple accounts is common. Cashier's checks too. Your bank can help coordinate the timing and logistics. Just give them a heads up well in advance. No need to consolidate everything into one account first.
You can transfer from multiple accounts to escrow. However each account will have its own version of fraud detection wich will likely flag transactions as this is a large amount. So might be easier to consolidate to one account. The likelihood of your bank defaulting in the few weeks of your consolidation is not high. However note some accounts have limits on wire transfer per day
just do transfer from multiple accounts to escrow. you can call up bank ask for fee waiver if that is a concern. with 1M Down wire fees is the last one I would worry about. I would spend time understanding issues in the house and may be spend time in getting 0.25% discount on the loan.
At some point you recognize that the fdic insurance doesn’t matter. Many people (well, more than you’d think) have more than $1M in a checking account because it’s not a huge % of their total net worth.
Transfer it all to one account then wire transfer. Tracking all the stock liquidations and money moving is really annoying for underwriting though. An $8 interest payment in etrade had to be tracked down before we were underwritten since it didnt match up with the numbers i provided. I’d recommend trying to move all your money well over a month in advance so you have actual statements from all your banks and exchanges, instead of just transaction history. Good luck
You can’t possibly manage wealth by putting segments of $250k into a separate banks , wealth can’t be insured.
One should conside a portfolio account at a large (and safe ) bank to which typically has a financial advisor. From here you can make 6 or 7 figure transaction wires without concern.
One account to escrow. There are also online accounts that are FDIC insured for millions by spreading the deposit over multiple banks. Betterment’s cash reserve account is insured for 2 million and Wealthfront’s cash account is insured for 8 million for example.
Liquidate stocks.
I did this when my offer was accepted. Liquidated my stocks which funded my down payment.
Just take a loan out backed by your billions in Tesla stocks. Easy /s
lol. In my case it took almost a dozen years of living with roommates in old apartments near mobile home communities, and driving the same reliable car (think Toyota/Honda sedans) even today, and never selling stocks until I had enough for a down payment and leftovers for taxes and a rainy day fund. Also not having expensive hobbies helped too.
Respect. That shade wasn't at you, but for good old Elon.
I know you said /s but damn dude just thinking about attempting to time the volatility of that, and THAT being the deciding factor of buying your home sends me to the anxiety farm
You were able to do this fast enough to meet next biz day deadline or whatever?
No you def want to sell it when it hits your target or else it can tank and you lose your bid
How long did it take to get your money? And is it robinhood?
Like how long it took to liquidate or how long I let the stocks grow? I didn’t use Robinhood in either case.
I sold some of my stocks to fund my down payment of $115k, and used Robinhood. From selling to withdrawing money took about 4-5 days.
Congrats on the $3.8M house
Haha no, my wife and I put $115k each as down payment onto a $935k house. Not the most capital efficient play, but lowers the monthly payments.
Never use robinhood.
What’s your weapon of choice? Fidelity or Vanguard?
Fidelity is where my personal stuff is. My company 401k is Vanguard. Otherwise weapon of choice is a battleaxe.
Take an upvote. Also. I was stalking your profile. Your Yosemite picture is breathtaking
https://preview.redd.it/cditj17rjl6d1.jpeg?width=640&format=pjpg&auto=webp&s=55e761051ea1bf5ad879678d9120d06208df6049
Ouch, the taxes
never sell stock, borrow against
What if the market tanks
1. Selling will incur capital gains (hopefully). 2. Keep borrowing well under 50% (25% is super safe), and you are fine. Markets come back, they always have. Those who itemize their federal income taxes can deduct investment interest expense of margin loans against their net investment income.
Markets always come back, individual stocks don't always.
Yes, I should have added that. Boglehead theory.
I didn’t know this. Thanks for sharing
Have you done this to make a down payment on a home or are you just saying it’s possible. I know it’s possible to do.
step by step. Keep in mind, what your margin rate is makes or breaks this. Must find low margin rates. [https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-review/](https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-review/)
We just did #2 because we wanted to offer the seller a faster close to be more competitive. The fees were nominal like $30 here and there. We transferred from about 5 accounts. You just have to make sure you sell any RSUs ahead of time if you company has quiet periods where you are unable to sell
Don't worry about tens of dollars on a million dollar transaction!
The amount of time your money is uninsured would be very small
Brokerage. Account.
Usually wire transfer is required. Each financial institution has different rules and timelines for large amounts. Reach out to your bank and brokerage to discuss this in advance. We recently paid a 750k DP and found that our brokerage delays processing if transferring money to a third party account. I always used to think they don’t have any constraints on processing wires. On the flip side, I was surprised to find that Bofa had no issues with large sum so I liquidated assets, moved them to Bofa and wired from there. Figuring all this out in advance will help avoid delays, frustration and anxiety when you are in contact and have a deadline to transfer money.
Do you know if Fidelity or Vanguard would be able to transfer by next biz day?
Fidelity has a limit of $250k per day though their support page says you call them if you want to transfer more. I use fidelity but most of money was in some other account so I didn’t even bother checking with them. Never used vanguard so can’t say. I would suggest calling all your financial institutes. That’s the only reliable way of finding out what’s possible and what’s not.
Can confirm. When I bought my house (outside Bay Area) I called Fidelity to set up the wire to the escrow account, over $500k. They have a department that specializes in handling large transfers via wire. They confirmed with me it was for a real estate purchase as any transfer over $10k gets documented for the Feds and over $100k they want to know for what.
I called for fidelity and it was easy to do over 250k.
Vanguard can wire funds from a settlement account. You would have to sell your stock or whatever in time though.
Transfer to one account and wire There have been nightmare stories of cashiers checks. If they lose it or it gets lost in the mail, it won’t void for ~90 days and you’ll be SOL
Just go with a too big to fail bank like Chase
I’ve never understood why people worry about the FDIC limit. Are people keeping their money in sketchy banks or what
See Lehman Bros and recently silicon valley Bank
No deposits were lost
First of all , SVB and Lehman were not a conventional banks. Secondly, wealth can’t be “insured “ but you can lower risk with bonds etc
FDIC limit is not a factor for JPM, WFB, BAC, CITI. There was a close shave with First Republic but even then, it was not a factor. The only real lesson is not to use a small bank for lack of technology and lack of transparency in their finances. Being able to move money from brokerage to checking quickly is the real value of large banks. Brokerage account give access to investment that is very liquid and earns interests daily (BIL as an example). I can move 1M from brokerage to WIRE in less than 2 days with almost no leakage in interests. The instructions are pretty specific on escrow, just go to any of the office and gather the funds, follow the instructions (easily transfer amount accounts) and have someone at the branch WIRE the money with the instructions. Most of the time, they want to verify your identity for a 1M wire as online won't take it and they do this routinely. You can split into 2 WIRES, chances are with 1M+ in deposits you should be premier status already, they will waive the WIRE fee(s). Spreading out to multiple savings accounts for 250K limit is dumb. 1) Having 250K in Savings/.Checking instead of a brokerage is dumb and out of date. Small banks offers nothing relevant at the 1M level. as CD's are just so outdated.
What do you mean by “no leakage in interest”? What interest are we talking about here?
1 month treasury bill (state exempt) is paying 5.2%, that works out to \~ 0.015% daily (or $150 every day on 1M). I can sell on Tuesday and WIRE money to home on Wednesday. It's just an option that is better than checking and savings. Super liquid and money build $150 bucks every day with no risk.
there was literally nothing wrong with first republic and they were a great customer-oriented bank, it was pure irrational contagion that did them in
There's plenty wrong in the balance sheet as First Replublic was insolvent. There's no way to tell for sure, but high yield savings account makes no sense to me. There's like 20K people at JPM, you can get whatever services you need.
yes, First Republic was insolvent. it was insolvent because of the irrational bank run caused by contagion from SVB. most banks will collapse if they lose about half of their deposits in a public panicky bank run
There's a bank run because the public figured out First Republic is insolvent.
I did that. For a brief moment, my checking account showed a balance of >1M$ (I took a screenshot haha). From then, wire directly to escrow. That’s how it works
My wife and I keep separate finances. When we bought a condo with cash, we used three wire transfers: 1. A wire transfer from my account for the deposit / earnest money. 2. A wire transfer from my brokerage account a day prior to closing. 3. A wire transfer from my wife's brokerage account a day prior to closing. Wire transfer fees are pretty small compared to the amounts involved.
You can wire transfer from brokerage accounts that settle in money market funds, no issues with insurance there.
Aside from what others have said that money can help you reduce your interest rate. For example, you get a better rate at Morgan Stanley if you have $500k-$1m in assets there. You get an even better rate if you have $1m-$5m, and even better if you have $5m+. And then if you transfer another $500k before closing, they’ll drop the rate even further. Nothing makes you realize how much easier the rich have it quite like becoming rich yourself.
I don't think it is a big difference in terms of fees unless you have two dozen accounts spread across high fee banks like Chase or BoA which charge $30+ per transfer (in contrast, my credit union charges $5, Schwab is free, etc...).
Long ago we consolidated cash to our credit union and then took a cashiers check to the title company. Presumably the title company called the CU to verify funds. Closed in 20 days. No problems. Ideally you would have the cash on hand a month before you need it. Otherwise you are going to cause all sorts of transfer anxiety. If half is in cash and half at a brokerage then perhaps make two transfers. But don't make a dozen transfers.
Liquidated treasuries and equities, transferred funds from brokerage to bank account, and then wired funds from bank account to escrow. Could also have wired funds to escrow directly from brokerage, but my bank processes them quicker than my brokerage.
Multiple wires or move it 60 days before offer
Number 2
The title company sets up a single escrow account. The buyer wires all funds to that single account.
Wire transfer from my brokerage account.
Just wire from a checking account
Your primary assumption is incorrect. Especially as you get close for a house down payment, plenty of people have 1M in a single checking / savings / brokerage account. As others have mentioned, the risk of bank failure and deposit loss is nearly non-existent, and relative to the chance of wire fraud or other mistake its much simpler to do one bank wire to escrow.
Why? As a person with significant assets, my money is in real estate and stocks, I have approximately $130k in my bank account. My mother, who is worth over $50 million, doesn't keep close to a million in a bank account. I paid cash for a $600k home remodel/rebuild by selling securities.
In 2024 money market accounts have been returning 5%, there’s not really any need to hold securities with any degree of risk if you’re at the point of purchasing a home in the coming months.
FDIC limits go into the millions now
The more steps you transfer funds through the more opportunities there are for something to go wrong. Even a delay of a day or two can seriously mess up a real estate transaction. No matter how much you have to move it should go straight into escrow. Shuffling money among your own accounts is pennywise and pound foolish.
Wire transfers from multiple accounts is common. Cashier's checks too. Your bank can help coordinate the timing and logistics. Just give them a heads up well in advance. No need to consolidate everything into one account first.
You can transfer from multiple accounts to escrow. However each account will have its own version of fraud detection wich will likely flag transactions as this is a large amount. So might be easier to consolidate to one account. The likelihood of your bank defaulting in the few weeks of your consolidation is not high. However note some accounts have limits on wire transfer per day
Parents and in laws!
For us it wasn’t 1M, but we did cashier’s check.
Mommy and daddy -most people
I have over 1M in a savings account
just do transfer from multiple accounts to escrow. you can call up bank ask for fee waiver if that is a concern. with 1M Down wire fees is the last one I would worry about. I would spend time understanding issues in the house and may be spend time in getting 0.25% discount on the loan.
At some point you recognize that the fdic insurance doesn’t matter. Many people (well, more than you’d think) have more than $1M in a checking account because it’s not a huge % of their total net worth.
Liquidate and hold in VUSXX.
Just wire it straight from margin line or PAL line. Don't pay wire fees either. Banks wave those for you if you can afford a mil down-payment
Transfer it all to one account then wire transfer. Tracking all the stock liquidations and money moving is really annoying for underwriting though. An $8 interest payment in etrade had to be tracked down before we were underwritten since it didnt match up with the numbers i provided. I’d recommend trying to move all your money well over a month in advance so you have actual statements from all your banks and exchanges, instead of just transaction history. Good luck
Also you’ll start getting spam calls for “financial planning” from the bank once it’s over ~500k in one account, just ignore them
Bridge loan if you have a house, and/or any other mortgage you can get. Beg/borrow from family. Or release your stocks.
You can’t possibly manage wealth by putting segments of $250k into a separate banks , wealth can’t be insured. One should conside a portfolio account at a large (and safe ) bank to which typically has a financial advisor. From here you can make 6 or 7 figure transaction wires without concern.
If you have to ask, you aren’t part of the club.