When the loan funds are unavailable on the same day as closing, what type of settlement is this?

A situation where loan funds are unavailable on the same day as closing is known as a dry settlement. In this type of settlement, the buyer may sign all the necessary documents and take possession of the property, but the actual funds required to complete the transaction have not yet been disbursed. This can occur due to various reasons, such as delays in securing the loan or other issues with the financing.

A dry settlement means that the transaction can be completed technically, but the buyer does not receive the funds to finalize the purchase, which often leads to a delayed transfer of ownership. It can place the buyer at risk, as they may own a property without the means to complete financial obligations related to that ownership until the funds are secured.

Understanding dry settlements is crucial for mortgage professionals, as it impacts the timing and logistics of property transfers and the overall buyer experience.