A new home purchase can be an exciting time! But being a new owner of a home can also come with a lot of stress and questions. That’s because the real estate transaction and closing process can feel confusing.
Home buyers often feel overwhelmed and confused, from the home inspection to closing costs to new mortgage payments and property taxes.
But, there is good news! We are here to break down any confusion you may have over the funding date versus the closing date.
Closing day is the day you officially sign all mortgage loan documents. That means all of the documents have been verified and then signed between you and your mortgage lender.
The following are the closing documents you can expect to sign, although there may be more depending on your location:
- Promissory note
- Final closing disclosure form
- Deed of trust
- Mortgage insurance disclosure
- Acknowledgment of employment
- Escrow disclosure
The actual closing date of the loan does not always match the funding of the loan. There are also differences in the types of closing that occur from state to state.
Wet Closings vs. Dry Closing
You may have heard of a dry closing or dry closing state. That is when all mortgage loan requirements have been met, except for the actual funding of the loan. Dry funding states include Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington.
A wet closing is stricter than a dry closing. It is when the closing date of signing and the disbursement of funds happen simultaneously or within a minimal period. There are more wet funding states, including Florida, than dry funding states.
The funding date is a little bit different. That is the date when your lender pays out the mortgage funds to your escrow account or the title company. The loan being funded is the official purchase of your new home. In many ways, it is the final step of home ownership.
The funding date can sometimes fall on the same day as the closing date. Other times, it may take up to a few business days to be funded after closing.
It is essential to know when your funding date is. That is because you will be responsible for the interest that incurs on the loan from that date.
Mortgage loans incur a daily interest charge between the funding date and the first loan payment.
Why is There a Funding Delay?
One reason that your funding date may occur after the closing date is the time of day. If you do not sign the paperwork until Friday afternoon, there may be a few days waiting period for the loan actually to fund. That is because financial institutions need time to process purchase transactions.
Banks and lenders are only allowed to transfer funds at certain times of the day. Before sending out any loan proceeds, their signing agent must go over each document to ensure that it has been appropriately signed.
The loan officer also must ensure that there is no missing information, such as a recent pay stub.
Since this process can be timely, the closing date can come and go, with the actual funding taking extra time. If the lender missed the transfer funds cutoff time, it likely would not fund until the following day.
That is why it is a good idea to have your documents ready to go. Keep your most up-to-date pay stubs available, and check in with your closing agent.
In addition, if there are any federal holidays around this time, it may also add additional time to the funding date.
The Difference Between Funding Date and Closing Date
Different regions and states have different rules for funding and closing dates. While the differences can be subtle, they may use the terms interchangeably.
One real estate agent in one state may refer to your signing day as the “closing.” While in another state, they might use the word “closing” to mean “funding.”
To keep the process simple, you can call signing the papers the “signing” and the release of funds the “funding.”
Your best bet is to be clear with the real estate professionals you are working with. If you do not know what they are referring to, ask!
What Happens at Funding
The following is what you can expect at the funding:
1. Final loan documents are approved by the lender.
2. The lender will wire the funds to the escrow company.
3. The mortgage/deed of trust and the deed/title will be recorded. Ownership is officially transferred to the buyer.
4. Funds are distributed to the seller.
When Can You Move In?
You are probably very eager to get your keys and move in when purchasing your home. Once the loan is fully funded and the deed has been recorded with the county, you have the legal right to receive your keys.
Be aware that the recording can only occur on business days. Holidays and business hours may cause a delay in the timing of the recording.
Tropic Coast Homes
Are you ready to purchase a home? Our company buys and sells residential properties in southwest Florida. As one of the premier companies that buy houses for cash in Florida, the places we sell have been renovated and are “move-in ready.” If we don’t have what you’re looking for, we also have a team of licensed agents to help you find your dream home.
Be sure to check out our “Homes For Sale” page. Here you will find homes that we currently have to offer. If you find a home you’d like to purchase, this page will tell you when the house will be ready for sale (if it’s not already). If it’s still under renovation, you will also find a thorough description and some photos to give you an idea of what it looks like.
So, if you are thinking about buying a house in Florida, especially in the Southwest region, contact us!
Read Next: Cash to Close vs. Closing Costs