Mortgage closing and funding are the final chapters in the mortgage loan process. Closing occurs when all parties sign loan documents at the title company. Funding occurs when the title company confirms receipt of the lender’s funds.
See closing day overview for an expectation of what to expect prior to funding. Please contact the Mortgage Mark Team with any questions about closing and funding.
How Mortgage Funding Works
Let’s break it down in its simplest form. A home loan becomes official after funding – which can take hours after closing. After closing takes place, a lender reviews the signed loan documents and then wires their funds to the title company. The title company determines when the loan actually funds.
The timing depends on the loan’s purpose (purchase vs. refinance), the occupancy (owner occupied vs. non-owner occupied), and the seller (individual vs. a builder).
For purchase transactions, buyers are not allowed to access the home until a loan is funded; therefore, they should plan accordingly when scheduling new home services (like movers, cable, painters, etc.)
Most purchase home loans (and non-owner-occupied refinances) close and fund on the same day. Conversely, refinances on primary homes mandate a three-day-rescission period before that happens (see below for more details).
Mortgage Loan Process OutlineClick here for an overview on each step.
- Loan Packaging & Lender’s Disclosures (1-2 days)
- Loan Setup (2-3 days)
- Processing / Credit Approval (2-3 days)
- Initial Underwriting Approval (2-3 days)
- Sign the Initial Closing Disclosure (CD) (Immediate)
- Final Underwriting Approval (1-2 days)
- Docs to Title / Final CD Issued (1-2 days)
- Closing & Funding (TBD) <– YOU ARE HERE
- After Closing
Scheduling the Mortgage Closing
The scheduling of mortgage closing varies every transaction. Oftentimes the title company will reach out to the borrowers a few days before closing to schedule the details. In other instances, borrowers and Realtors are proactive and contact the title company to schedule the mortgage closing.
Most title companies won’t allow a definitive closing time to be scheduled until a few days before closing. A handful of title companies won’t even allow a closing to be scheduled until they have the lender docs.
The Mortgage Closing Process
The mortgage loan closing process typically takes about 45 to 60 minutes. All borrowers, including non-purchasing spouses, must be present to sign the mortgage closing documents (unless a power of attorney is created in advance).
After all parties (i.e. the buyers and sellers) sign the loan documents, the title company electronically sends the signed loan documents to the lender for authorization.
The lender will review the signed documents and then provide the title company with a “funding number” to access their wired money. The title company provides the official notification to all parties once completed.
Funding typically occurs within a few hours after all parties sign the closing documents.
Mortgage Closing Costs
The actual costs associated with a mortgage closing will vary depending on factors such as:
- The lender’s fees
- Whether it’s a new build (new home closing costs can sometimes be higher)
- If you’re the buyer or seller (sellers pay different costs)
Our mortgage lending dream team can provide accurate mortgage closing cost estimates so you can better plan for your move.
New Construction Closing and Funding Timeline
The mortgage closing timeline for newly constructed homes typically takes longer than for existing homes. This is because there is an extra step in the process. New construction home loans typically aren’t considered funded until the title company disperses the wired money to the builder’s bank.
Because builders finance the construction of the home, those loans must be paid before funding is finalized. This means that new construction home loans aren’t considered funded until AFTER the title company disperses money to the builder’s bank. This adds time to the overall mortgage closing process.
Additionally, bank wires typically can’t be sent, or received, after 2:00 or 3:00 p.m., depending on the bank. This means that the title company needs to have the lender’s funds well before these cutoff times to give them the time they need to send their own wire to the builder’s bank.
For new construction, we would recommend scheduling movers and deliveries the day AFTER closing. Unfortunately, a moving van waiting in the driveway won’t expedite the process.
Taking Possession of the Home
We, the lender, are not involved with taking possession of the home. Contact the Realtor, your real estate agent, to determine how to gain access to the home. (For new construction, the builder will provide the keys after the wired money has been received).
The following are various methods for acquiring the keys:
- The sellers may leave the keys at the title company and require that funding occur before title releases the keys. This means you either need to wait around for funding, or go back to the title company after funding to pick up the keys.
- The Realtor provides the keys to the buyers after funding occurs. Off the record, the Realtor often provides the keys to a buyer before funding with the understanding that the buyer waits for the official funding before visiting the house.
- Occasionally the sellers will be involved and dictate how to access the keys via lock box.
Ultimately, you need to check with your Realtor to determine how the keys will be provided. We can’t offer advice on this matter, as the answer will vary depending on your specific sale contract.
Mortgage Funding and Refinances
If the transaction involves an owner-occupied home, closing and funding won’t happen on the same day. Instead, there is a mandatory three-day waiting period between closing and funding (excluding Sundays and Federal holidays).
The three-day waiting period is known as the “recission” period, as the Consumer Financial Protection Bureau explains. The idea is to give borrowers time to finalize the loan – or decide if they want to cancel the mortgage funding process.
If we think about it, what this means is that an individual may invest a lot of time and effort into bringing a loan to the closing stage, only to cancel their loan after signing the documents. This is not ideal for sellers, but it’s an essential part of the mortgage closing process when owner-occupied homes are involved.
Refinances on vacation homes and investment properties do not have this waiting period and everything finalizes on those loans the same day as closing.
Examples of Closing and Funding in Mortgages for Refinances
Let’s say that the refinance on the primary home closes on a Thursday. Since banks don’t send or receive wires over the weekend, we can’t count Sunday towards the three-day recission period. In this example, then:
- Friday is day 1, Saturday is day 2, and Monday is day 3.
- The loan funds on Tuesday.
This is all assuming that there’s no federal holiday – if, for example, Monday is a holiday, Tuesday is day 3 and the loan funds on Wednesday.
Similarly, if a loan closes on a Tuesday, here’s how mortgage funding works:
- Wednesday is day 1, Thursday is day 2, and Friday is day 3.
- Banks won’t process wires over the weekend, so the loan funds on Monday.
Have extra questions about the mortgage funding timeline or your closing date? Our experienced agents can help.
Completing the Mortgage Closing Process
Be sure to check out our after closing section to learn what happens days, weeks, and months after closing.
Are you looking for a home loan? Mortgage Mark can help you find the right type of loan for your needs. Our services are completely personalized to your situation. Our experienced team can answer any questions you have so you can apply for a loan with confidence.
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