Loans By Kathy: June 2011

Closing vs. Funding

Closing vs. funding almost sounds like a boxing match, and lately, it seems to be. It is important for buyers to understand the two definitions and what that means to them when buying a home.  These terms will apply to FHA, VA, USDA and Conventional mortgages.

The closing is defined as the time and place where the documents are signed by the buyer and seller to complete the transaction.  Funding refers to the authorization by the lender when all of the buyer's loan documents are signed and returned for release the funds for the transaction.

Until the loan is funded, technically, the buyer DOES NOT own the home yet.  A recent trend especially when buyers have purchased an REO (real estate owned).  Many times the seller does not return the signed HUD-1 Settlement Statement in a timely fashion.  I have seen several cases where the seller did not return the documents until the next day.

This can be a problem if you were planning on moving in the same day as closing.  This could be disastrous if you closed on Friday and were hoping to move in over the weekend, but the loan has not funded.

Don't get caught by surprise, please allow for this contingency.

 

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Kathy Sheehan Senior Loan Officer

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The opinions and general information in this blog are soley those of Kathy Sheehan.  Specifics regarding an individual case should be discussed in detail with a loan professional.  For a confidential consultation, please feel free to contact me via phone or email.  All terms and conditions are subject to change.

 

Comment balloon 7 commentsKathy Sheehan • June 29 2011 09:29PM
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