What is loan funding and when does it happen?

Funding a real estate transaction as a homebuyer involves obtaining the necessary funds to purchase a property. Here are the typical steps involved in funding a real estate transaction but please refer to your lender for specifics:

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1. Earnest Money: Earnest money is a good faith deposit that is held in escrow for the duration of the real estate transaction. At the end of the transaction this will either go towards the buyer's down payment, closing costs or pre-paid expenses like taxes and insurance. 
    

2. Down payment: A down payment is a percentage of the purchase price that the homebuyer pays upfront. The amount of the down payment depends on the purchase price of the property and the lender's requirements. This amount is typically due during your closing document signing.
    

3. Mortgage financing: If the homebuyer is unable to pay for the entire purchase price upfront, they can apply for a mortgage. A mortgage is a loan from a lender that covers the remaining cost of the property. The homebuyer will need to provide proof of income and creditworthiness to qualify for a mortgage. 
    

4. Closing costs: In addition to the down payment and mortgage financing, there are also closing costs that the homebuyer must pay. Closing costs include fees for the loan, appraisals, title searches, and other expenses related to the transfer of ownership.
    

5. Escrow: The funds for the real estate transaction are typically held in an escrow account. The escrow company holds the funds until all the conditions of the sale are met, such as the completion of inspections, appraisals, and any necessary repairs.
    

6. Wire transfer: On the closing day, the homebuyer or lender will need to wire transfer the remaining funds to the escrow company to complete the transaction. The funds will then be disbursed to the seller, and the homebuyer will receive the keys to the property.
    

Overall, funding a real estate transaction as a homebuyer involves making a down payment, obtaining mortgage financing, paying closing costs, and transferring the necessary funds to complete the transaction. It's important for homebuyers to work with a knowledgeable real estate agent and lender to ensure a successful and stress-free transaction. Need a lender referral? Our client's have had great success with Tia Bennett with Designer Mortgage Services. Click here to schedule a consultation to see what's possible for your next move is here to help!