Closing Procedures and Fund Disbursement

In the 3-5 business days before closing, several critical activities converge. The Closing Disclosure is delivered (triggering the 3-day waiting period), final conditions are cleared, the lender issues "clear to close" approval, and the title company prepares the settlement statement. The investor should review the CD line by line, comparing every fee to the original Loan Estimate and confirming the loan amount, rate, payment, and cash-to-close figures. Any discrepancies should be raised immediately—some require a corrected CD and a new 3-day waiting period.

At closing, the borrower signs approximately 50-100 pages of documents including the promissory note (the promise to repay), the deed of trust or mortgage (the security instrument), the closing disclosure, and various affidavits and disclosures. The borrower brings a cashier's check or wire transfer for the cash-to-close amount. In table-funding states, the lender wires funds to the title company, which disburses to all parties simultaneously. In escrow-closing states, the escrow agent coordinates the exchange. Recording of the deed and mortgage at the county recorder's office typically occurs within 24-48 hours of closing.

After closing, the loan enters a 60-day transfer period during which servicing may be sold to a different company. Borrowers receive a "hello letter" from the new servicer and a "goodbye letter" from the originator. The first payment is typically due 30-60 days after closing. Investors should confirm that escrow accounts are set up correctly, verify that hazard insurance is in place with the correct mortgagee clause, and save all closing documents in a permanent file. Understanding the right of rescission: investment property loans do NOT carry the 3-day right of rescission that applies to owner-occupied refinances.