11 Nov Funding and Closing

“We Have Funding” or “We Have Funding Approval!”  When the Escrow officer states these words at the closing table, it’s time to celebrate, swap keys, take pictures, give gifts and wrap up any final details for the new buyers and the sellers. Proceed and payoff wires can then be released, checks presented, disbursements can go out and recordings can happen. Table funding has changed a lot over the past few years and there are a few things that can make funding easier for all involved on closing day.

Closings rarely ever happen with buyers and sellers at the table together since the Covid days. But, this can create some challenges because everyone tries their best to accommodate their client’s schedule.  For funding purposes, the seller should always close before the buyer. Why? If you have a lender with funding conditions (meaning, no money is disbursed until the lender says so)-the following documents are typically required to be signed by the seller before the lender will give approval.

1. Signed & notarized warranty deed/special warranty deed/beneficiary deed/trust deed,etc.

2. Signed seller’s CD

3. Signed settlement statements (this is not always the case, but some funding lenders require these as well)

4. FHA/VA seller signed required documents-these include agent signatures

5. All or some of the buyers signed loan documents

6. Evidence of buyer’s “cash to close” check or receipted/posted wire

If the seller signs after the buyer and there are funding conditions, your buyer won’t be able to get the keys and move in until the lender has approved all required docs. For example, if the buyer closes at 9, but seller closes at 2, and there are funding conditions, the lender may not approve until after wire cut off-so seller will not receive proceeds until the following day.  Escrow officers have to follow the lenders closing instructions because the lender is an insured party of the transaction. In essence, everyone is waiting all day. It’s much easier to “pre-sign” your seller the day at their time of choice so that funding can occur as soon as the buyer signs.

The best closings for title and all involved do not have funding conditions! Nothing is worse than having to sit and wait….and wait….and wait after signing has occurred for funds or funding approval. That is not within a title company’s control and we feel badly when this occurs, especially when everyone has done such a great job.

If your buyer has an out of state lender that typically closes in escrow, they may not understand the immediacy of table funding. Escrow officers will always try to tell these funding lenders that funds need to arrive before signing, but we still encounter funding lenders who refuse to send wires until after all signing has occurred, all documents have been reviewed-and sometimes, that bump into wire cut off time.

Remember, the closing is the last impression to leave with your client, so you want it to be a seamless one! Timing is important. At Homestead Title, it is our pleasure to best to assist you with the logistics of a closing and to make that day a celebration for you and your clients!

– Wendi Milinkov @ Homestead Title & Escrow