United States
Hong KongClosing, funding and post-closing
At closing the borrower signs and the Closing Disclosure is reconciled. Funding follows, delayed on a rescindable refinance until the three-day window expires. Post-closing covers recording, delivery and any servicing transfer.
The last station. Three distinct phases that get compressed into one word in conversation.
Closing
The borrower signs the note and the security instrument, and the figures on the Closing Disclosure are reconciled against what is actually collected.
Signing is not the same as funding. On a purchase they usually happen close together; on a rescindable refinance they cannot.
Funding
Money moves. On a refinance subject to the right of rescission, no funds are disbursed until the three-business-day window expires.
That is the practical consequence of rescission that originators explain most often, and borrowers are frequently surprised by it.
Some underwriting conditions must be cleared before documents are drawn and others before money moves. A file can be signed and still not funded because a prior-to-funding condition is outstanding.
Post-closing
The security instrument is recorded, establishing the lien and its priority. The loan file is delivered to whoever will hold or purchase it.
Recording is what makes the lien effective against third parties, which is why the timing matters for priority.
Servicing transfer
Very common, and often within weeks. RESPA requires notice 15 days before the effective date, and a 60-day grace period afterwards during which a payment sent to the old servicer cannot be treated as late.
Setting that expectation at closing prevents a call two months later.
The first payment
Generally due on the first day of the second month after closing, because mortgage interest is paid in arrears.
Per-diem interest at closing covers the remainder of the closing month, which is why a late-month closing produces a smaller prepaid interest charge.
Common questions
What is the difference between closing and funding?
Closing is signing. Funding is when money moves, and on a rescindable refinance it waits for the three-day window to expire.
Why is recording important?
It makes the lien effective against third parties and establishes priority.
When is the first mortgage payment due?
Generally the first day of the second month after closing, because interest is paid in arrears.
What notice is required for a servicing transfer?
15 days before the effective date, with a 60-day grace period afterwards.
Why does a late-month closing mean less prepaid interest?
Per-diem interest covers only the remainder of the closing month, so fewer days are charged.