Getting word that your mortgage loan has funded brings a huge sense of relief All the paperwork has gone through, the lender has signed off, and the money for your new home is on its way But the process isn’t completely finished just yet. Now that your loan has funded, what exactly happens next?
An Overview of Mortgage Funding
Before getting into the specifics, let’s review what it means when a mortgage loan funds. Funding occurs after the loan closing, which is when you sign all the final loan documents. During closing, the lender reviews the documents and sends funding authorization to the title company.
The title company then receives the lender’s funds through a bank wire transfer Once the title company has the money from the lender, your loan is considered officially funded
For most real estate purchase loans and non-owner occupied refinances, closing and funding happen on the same day. However, refinances for owner-occupied primary residences have a mandatory 3-day waiting period between closing and funding.
Get an Update from Your Mortgage Company
One of the first things that will happen is your mortgage company will contact you to share the good news that your loan has funded. They can also provide specifics on the timing and details.
Be sure to connect with your loan officer or mortgage company right away if you haven’t heard from them soon after funding was expected. You want to confirm the wire transfer went through on schedule.
Finalize the Deal if You’re Buying a Home
If you’re purchasing a home, the title company will finalize the transaction once your loan is funded. Here’s how it works:
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The title company receives the funds from your lender. This is the mortgage funding wire transfer.
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They distribute money to the seller. The title company sends the seller their proceeds from the sale by wire transfer or cashier’s check.
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The title transfers to you. Finally, the title company records the new deed under your name. Congratulations – you officially own your new home!
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You get the keys. Your real estate agent will coordinate with the seller on transferring over the keys. For new construction, the builder typically handles key delivery.
Be flexible on the timing as it may take a day or two to get access depending on the situation. And schedule any moving trucks, utility connections, etc. accordingly.
Receive Your Funds if You Borrowed for Another Purpose
If you took out a personal loan, auto loan, or borrowed for another purpose besides a mortgage, you’ll receive the money directly. Here are some possibilities:
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Cashier’s check: The lender can mail you a cashier’s check with the loan amount. You then deposit the check into your bank account.
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Wire transfer: The lender directly wires the funds into your checking or savings account. The money will appear in your account shortly after funding.
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Direct deposit: Some lenders can deposit the funds directly into your designated bank account. It will show up like any other ACH deposit.
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Payoff check: For a refinance, the lender may send a check to your old lender to pay off your prior loan. Any extra funds would come to you as a cashier’s check or wire transfer.
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Pick up in person: In some cases, you may be able to pick up a physical check from the lender’s location.
Know When You’ll Receive Leftover Funds
When borrowing money for a large purchase like a home, you’ll likely need more funds than the exact purchase amount. The lender accounts for this by providing some extra wiggle room in your loan amount.
Any leftover loan funds after the purchase gets paid off will come back to you in the form of a check, wire transfer, or direct deposit. For refinances, you’ll receive any amount above what you owed on your prior loan.
Ask your loan officer for a detailed breakdown of estimated leftovers and when to expect them. It’s wise to follow up in writing so you have documentation if the amount ends up different than discussed.
Make Your First Loan Payment
Your first loan payment will typically be due 30-60 days after funding. Pay close attention to the due date provided by the lender to avoid late fees or a credit score drop.
Set a calendar reminder so you don’t forget when that first payment needs to be in. Sign up for auto-pay if that feature is available to guarantee the payment gets made on time.
Log In to Your Lender’s Website
Most lenders today offer online account access to view your loan details, make payments, and manage your account. After funding, log in and explore all the available settings.
You can likely opt in to receive email reminders when payments are due and set up notifications for when payments get processed. Enable paperless statements if that option is available to reduce clutter.
Review Final Loan Costs
During the loan process, you received estimates of all the expected fees and costs. Now that funding is complete, review the final Closing Disclosure or loan paperwork to see exact totals.
Verify that the numbers match what you were originally quoted. Report any discrepancies immediately to your loan officer. Keep this paperwork for future reference on loan terms, interest rate, fees paid, and more.
Know Your Payment Schedule
Understand when your payments will be due – whether that’s monthly, bi-weekly, weekly, etc. Mark all the due dates on your calendar so you never miss one. Set up autopay through your lender as an extra precaution.
If you need to switch your payment date for any reason, contact your lender right away to discuss the options. They can walk through the requirements and any fees involved with date changes.
Consider Setting Up Escrow
If your loan offers the option for escrow, think about whether you want to enable it. With escrow, your monthly payment includes an extra amount that goes toward property taxes and homeowners insurance.
The lender manages paying those bills out of your escrow account when they are due. This avoids you having to pay lump sums for taxes and insurance separately.
Escrow provides more predictability in your total monthly housing costs. Just be aware that your payment amount will adjust annually as tax and insurance rates change.
Track Interest for Tax Purposes
For tax time, keep an eye on how much interest gets paid over the course of each year. The interest portion of your payment is likely tax deductible.
Your lender will send you an annual 1098 form detailing the mortgage interest paid. Refer to this form when you file your taxes to get all available deductions.
Understand the Prepayment Policy
Before paying extra toward your loan principal, review the prepayment policy in your loan documentation. Some loans penalize early payoff or limit how much extra you can pay per month or year.
Paying ahead on principal can help you pay off your loan faster and reduce total interest paid. Just be sure you know the potential fees involved depending on your loan program.
Explore Refinance or Modification Options Down the Road
At some point in the future if interest rates drop significantly or your financial situation changes, you may want to check into refinancing your loan or modifying the terms.
Your lender can explain the requirements for refinancing and estimate your new rate and monthly payment. Loan modifications involve revising your existing loan contract.
Celebrate Being a Homeowner!
Above all, be sure to celebrate this huge accomplishment! The mortgage process is long and complex. Take pride in the fact you made it through to funding and now own your home.
Making that first payment feels great. Slowly customizing your new space to fit your lifestyle is fun. Enjoy homeownership and create wonderful memories in the years to come.
Get Expert Guidance Every Step of the Way
Navigating the mortgage process on your own can be confusing and complicated. The best approach is to work with an experienced loan officer who can guide you from pre-approval to funding and beyond.
[Your company name here] is here to help make your homebuying journey smooth and stress-free. Our team of experts will walk through every mortgage requirement, cost estimate, and key date. We’ll communicate constantly so you know what to expect.
Contact us today to start the conversation about buying your dream home or refinancing your current mortgage!
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.
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.
Your Loan Has Funded
FAQ
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