The process of signing the contracts and wrapping up the loan should be the easiest part of the entire lending process. Because you and the lender have made all decisions, there should be no surprises. It’s just you and the parties involved signing paperwork, right?
The reality is that closing starts the second the lender accepts your loan file and you choose a loan program. It isn’t over until the lender disperses your funds, the title company files your documents, and the county accepts them. There can still be hiccups even after you sign.
Closing involves the following parties:
- Seller (for purchase transactions)
- Private lender
- Real estate agent(s) (for purchase transactions)
- Title company
- Escrow company
Read on below for what closing a private money loan looks like, but first – other articles in this series:
You Should Care About Private Money Loan Process
Step 1: Find Your Lender
Steps 2 & 3: Don’t Sweat the Negotiating Table
Step 4: Don’t Sweat the Negotiating Table
Step 5: Zzz…Don’t Sleep Through Loan Contract Review
Step 6: The Closing Table
Step 7: Pay Your Debt, Darn It
The last step to closing a private money loan: Settlement
All parties will be present in some way to ensure their portions of the transaction finalize correctly. Today, “presence” may mean signing or reviewing documents electronically; the days where parties met at the title company to sign together are mostly over.
If you’re going to a physical signing, you may be at the escrow company, lenders office, or have arranged for a notary service come to your home or office to execute the closing package. Where and how you sign will depend on the type of transaction and state regulation. Settlement is the process of signing the necessary documents.
Wait, one more step? What do you mean, you have to wait for the money?
The loan transaction is only complete when the title company records your security documents with the county (defined by your property’s location) and the lender disperses your funds. The lender will have arranged to have the funds wired to the escrow company at or directly after closing, or per other direction as outlined in your loan contract. This process varies based on time, state laws and county processes.
Generally, most transactions disburse funds within three days of settlement after the county recording is confirmed. If you need funds by a deadline, coordinate closely with your hard money lender and be alert that funds are not necessarily disbursed immediately after signing.