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Sale of a Home: Closing and Funding

When selling a property, it may be surprising to learn that the precise minute the money is deposited into your account is unexpected. Whether your buyer pays in cash or with a mortgage, the sale of your house can only finalize with the purchase money. This involves the transfer of funds from the purchaser (or lender) to the escrow account.

  • The buyer with a mortgage may be required to pay the down payment and closing charges.
  • The lender’s “closer” may evaluate the file, draft the closing paperwork, and arrange for funds transfer.
  • The escrow agent or attorney disburses monies in compliance with the lender’s closing instructions.

There will be no lender audit if it’s a cash transaction; therefore, the closure might be expedited. However, you must still sign a final paperwork, and the title firm or attorney must file the transfer with the local government. Only then may your property and funds be transferred.

Funding Facts

Suppose your buyer is paying in whole with cash, congrats! You should not worry about mortgage loan regulations. You can close if your home is declared insurable and the buyer’s funds are verified.

Otherwise, you would be working with a mortgage lender. Not all mortgage lenders finance their loans in the same manner, and these disparities may impact you, the seller.

Some states have “wet financing” regulations. Knowing what “dry financing” involves and what it entails is essential.

Selling a Home: Wet Funds

Wet funding indicates that the lender must check that all relevant paperwork has been filed and authorized before the closing date. The lender then notifies the title or escrow firm that the monies are forthcoming.

The lender orders the wire transfer before the closing date, guaranteeing that the funds are disbursed on or around the closing day. Not until then do you, the vendor, receive payment.

The majority of U.S. states demand wet financing.

Selling a Home: Dry Funds

Only Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, and Washington practice dry financing. On the closing day, you and the buyer will sign your mortgage paperwork here.

However, the necessary documentation may have yet to be submitted, and your cash may not be available.

Instead, the lender transfers the funds immediately following the closure (sometimes several days later). You will likely be disappointed if you anticipate a check or wire transfer on your formal closing date. Consider this if you need the money to close on acquiring another residence. It will be more than precisely concurrent.

There may still be complications. The buyer may be required to answer an underwriting question at the eleventh hour. Financing without interest leaves the closure open until all problems are resolved, and parties are legally protected.

For most sellers, the fundraising process occurs without their awareness or participation. You sign your forms, and you receive your money. However, it is essential to note that the cash transfer timing could be more precise.


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