The type of real estate transaction you conduct determines when the funding takes place. In most cases, purchase closings fund right at the closing, unless you live in a dry closing state, then it may take a few days. Refinances fund three business days after the closing because you have a ‘three day right of rescission,’ this gives you time to change your mind and cancel the loan.
Wet Closings
Wet closings are the most common. What they mean is the loan funds while the ink is still wet on the papers. Typically, banks wire the funds to the closing agent before you even get to the closing table. In some cases, you may have to wait a little while, but it’s typically the same day.
During a wet closing, the closing agent typically issues checks right at the table. The seller and all third parties getting paid receive their checks at the table. If the agent is wiring the funds, they’ll wire them the same day to the designated account.
Dry Closings
At a dry closing, the lender has the right to review the documents before funds get distributed. This can take one or more days, depending on the lender’s protocols and workload. At a dry closing no money exchanges hands. In reality, it’s not a closing; it’s just a payday loans in Utah signing of documents. It’s not until the lender approves the documentation that the funds get disbursed.
Refinances
When you refinance, you have three business days to change your mind. This does include Saturday, but not Sunday. If you close on a Wednesday, for example, you have until Saturday at midnight to change your mind. If you don’t rescind the mortgage by sending your request in writing, the loan would fund on the next business day, which would be Monday in this case.
What Happens After a Loan Funds?
Once the loan funds, everyone receives their payments and you get the keys (assuming it’s a purchase). You are now the proud owner of a new mortgage which you will start paying within 45 days or so. For example, if you close on September 15 th , you would make your first payment on November 1 st . Your paperwork will reflect when your first payment is due.
When Does the Seller Get Paid?
Sellers always want a wet closing. This means they receive the funds right away. If you live in California, or any other ‘dry’ state, the seller won’t receive the funds until all paperwork is reviewed. In some cases, conditions pop up that must be satisfied before the bank will release the funds. A wet closing is the most nerve-wracking for sellers since they have to wait for the funds.
At a dry closing, assuming everything goes well, the seller gets paid right away. At the end of the closing, the seller should walk away with a check in hand. The only reason this wouldn’t happen is if something popped up to delay the closing such as a credit issue for the buyer or a lack of evidence of a paid in full lien on the seller’s part.
Borrowers conducting a cash-out refinance get their funds after the three-day right of rescission. Typically, you can go to the title company or closing agent’s office and receive the funds that you are owed. If any portion of your cash-out refinance must go toward specific debts, your closing agent will disburse the funds accordingly. The lender provides the closing agent with specific disbursement instructions according to your loan approval.
Do You Have to Wait 3 Days After Receiving the Closing Disclosure to Close?
You are unable to close on your loan until you’ve been in possession of the Closing Disclosure for three business days. Similar to the refinance three day right of rescission, this gives you time to review the disclosure and ask questions. If you are unsure of the terms or don’t understand a specific condition, you have the three business days to work things out before heading to the closing.
Some loans fund at the closing table, while others take a while. The most important thing you can do is talk with your lender about what will occur. The last thing you want is to find out after the fact that you won’t get the keys to your new home for a few days because it’s a dry closing.