Funding The Loan
A loan is funded when the lender send their money to the title company. The funding is the final stage in the home buying and refinance processes, and there are a few things to know about the process and what’s required before a loan is finalized. Once the closing documents have been signed by all parties, the title company sends the necessary documents to our Closers for funding authorization. Once our Closers review the signed docs and clear all funding conditions, they then provide the title company with the “funding number” to access the funds for funding. The title company will then receive the funds and provide the official notification to you that the loan has funded. (and that you’re now in a ton of debt).
The signing of the closing docs typically takes about an hour. The closing loan package contains between 80 to 120 pages of documents depending on the loan program (and if there is a second lien then an additional 30-50 pages will be included). The closing docs will need to be signed with a blue pen (so leave that lucky black pen at home) and the signatures on the loan document will need to match the typed names exactly. So if Joe Smith has a legal name of Joseph Bartholomew Smith Jr. then he will be required to sign his full name even if his normal signature is Joe Smith. NOTE: for refinance home loans the names on the closing documents will be what’s shown on the vested deed. For refinances, if you have changed your name since title was vested, please let us know immediately so we can address this with our attorneys. Likewise, for purchase loans, please let us know if you changed your name during the loan process so we can plan accordingly.
TIMING (Purchase vs. Refinances)
The morning of funding our Closers order a wire so that the money is available for the title company – all title will need is a “funding number” to access the funds. For all purchase loans and refinances on non-homesteaded properties the funding typically occurs within a few hours after all parties sign the closing documents. For refinances on a primary home, the funding will occur on the fourth business day after closing due to a mandatory three day right of recession. This recession period does not count Sundays or Federal holidays. For example: if a refinance on a primary home closes on a Thursday, the loan will fund the following Tuesday since Friday (day 1), Saturday (day 2), and Monday (day 3) are the recessions days.
With many purchase transactions a home warranty is often paid by the seller on the buyer’s behalf. A home warranty typically offers 12-14 months of coverage on certain items in the house (such as appliances, HVAC, pool equipment,etc.). We, the lender, are not privy to the details of home warranties and recommend you connect with your Realtor or the title company with any questions you may have. Often times the Realtor will select the company for you based on the coverage offered and your needs. That said, you are welcome to select a home warranty company of your choice and modify the coverage type at the closing table.
Be sure to check out our Post Closing section once your loan has funded.