Call Us For a Free Initial Consultation

Tel: 954.796.9600 | Toll-free: 1.877.815.4560

The Difference Between Closing and Funding

home title company near youHome Title Company Near You Talks Closing and Funding

The real estate industry is full of jargon and legalese. It can be hard for the average person to understand what is going on when realtors, brokers, and agents use unfamiliar terms seemingly interchangeably.

When looking for a title company near you, be sure to find a company that can explain these terms in plain English. A property transaction is a life-changing decision, so you should be able to understand the process, and what’s expected of the various parties involved, without reaching for your dictionary.

One set of words that are often used together is ‘closing’ and ‘funding’.

What’s the Difference?
In real estate law, closing refers to the process whereby all the paperwork is signed and completed.
Closing is a multi-step process that happens on a pre-determined day, and requires the various parties (buyer, seller, realtors, broker, etc.) to come together to finalize the documents. In some states, closing is also when the buyer receives the title and deed to the property. The closing date is negotiated ahead of time, allowing all parties to organize their various documents and finances.

Funding, on the other hand, is when the lender and purchaser deposit the funds necessary for the purchase, typically sending them to the title company or settlement agent, in order to be disbursed from there. Sellers have not legally sold their properties until funding.

When Do They Happen?
Closing and funding usually occur on the same day, or they may occur separately.

In dry funding states, closing happens first, with funding taking place afterward. This allows the lender to review all the paperwork, and ensure that the sale is legitimate and problem-free, before any exchange of funds takes place.

In a wet closing, the closing and funding happen on the same day, or funding may even be organized prior to the closing. Wet funding allows buyers to leave closing with the keys and title, and for sellers to receive their payment that day. In these instances, the funds are usually transferred to an escrow account (managed by the title or settlement company) ahead of closing, and payments are prepared so that funding can occur at closing.

Nonetheless, closing and funding practices can vary from state-to-state; not all states have the same protocols and procedures for funding and closing.

Most importantly, find an experienced and reliable title company to help you through these processes. Home title companies often manage closing and the escrow account used for funding, so your choice of title company is important.

At Florida Home Title Company, we have been serving the Palm Beach, Broward and Miami-Dade counties for over two decades. Furthermore, we’re an attorney-run company with legal expertise, so we can explain complex jargon in clear and simple terms. Contact us today for more information about how we can assist your real estate transactions.