Definition
Funding is when lenders disburse loan proceeds to close the transaction. It typically happens same-day or next-day at closing. Until funding occurs, you don't have keys—funding completion confirms the lender released the money.
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Funding typically occurs the day of closing or the day after. The lender wires funds to the closing agent or title company, who distributes them to the seller and pays off existing liens. The borrower receives the keys after funding is confirmed.
Pro Tip
Confirm funding completion before taking possession of the home; don't exchange keys until the lender confirms funds have been received.
Example
At 2 PM on closing day, the lender wires the $360,000 loan funds to the title company, which immediately distributes them to the seller.