As you head to your loan closing, you may hear the term table funding used. You may also hear it called a ‘wet closing.’ This is in contrast to the other option, which is a ‘dry closing.’ While the names sound odd, it basically pertains to a closing that occurs when the ink on the paper is ‘wet,’ or ‘dry’, meaning waiting a few days before disbursing funds.
Table Funding or a Wet Closing
When a closing is a wet closing or has table funding, it means the loan funds right there at the table. All aspects of the closing are complete at the end of the meeting. If the loan is processed by a broker or loan originator, the wholesale lender provides the funds immediately at the table. The broker closes the name in its name, but immediately transfers the loan to the approving lender.
All funds exchange hands at the table. This means the closing agent has the wired funds immediately. The closing agent can disburse the funds after receiving approval from the funding bank, which is usually instantly. The seller leaves the closing with his or her proceeds in hand, as do all third-parties involved in the transaction.
The Dry Closing
A dry closing is when only papers are signed at the closing. No money exchanges hands yet. The paperwork then goes to the lender so the funding department can go over the package. They will review the package for legitimacy, look for any signs of fraud, and ensure that all paperwork is properly completed. Once it’s determined that all conditions are met, the funder will release the funds to the closing agent who then disburses them accordingly. The process can take between 1 and 4 days.
What States Allow Dry Closing?
Only certain states allow dry closing. They include:
- New Mexico
All other states are wet states or table funding states.
Advantages of Wet Funding
Wet funding or table funding does have its advantages. For starters, there isn’t a risk of unexpected conditions, at least major conditions. You may come across minor issues that must be addressed, such as proof of paid off debts or signature issues, but those can be easily resolved. You won’t come across major issues, such as issues with the contract. Those will be addressed before you get to the closing. If there’s a delay, it won’t be at the closing or due to funding.
Another advantage is the immediacy of the funds. Once a file is approved for funding, the lender wires the funds before the closing time. The closing agent always ensures the funds are there before starting the process. There’s no risk of delayed funds or deal falling through because of a lack of funds.
Advantages of Dry Funding
Dry funding, although only required in a handful of states, does have its advantages. Dry funding allows more time to deal with any issues. If there are loan document issues, a final audit necessary, or a final credit pull needed, the lender has time to get them done.
In addition, as the borrower, you get extra time to satisfy any lender requirements. If there is a debt you must have paid, you have more time to provide proof of payment. The lender won’t disburse funds until all conditions are met, but you can at least do the signing part to get that out of the way. Dry funding gives both the buyer and the seller more time to deal with last minute issues without risking delaying the closing.
Keeping the Closing on Time
No matter if you have a dry or wet closing, you should do your best to make sure you have everything completed before the closing. Use the following tips:
- Always follow up with your loan officer regarding any conditions
- Ask your loan officer specific questions about outstanding conditions for title, appraisal, or seller related issues
- Have your funds available for the down payment and closing costs before the closing date
- Get your cashier’s check before the closing date
- Ask questions if you don’t understand anything
With these simple tips, whether you have a wet or dry closing, you should get through the funding process. Work closely with your lender to make sure that everyone is on the same page.