What is Closing vs Funding?

by Mike Yeo on July 18, 2013

What is Closing vs Funding?

Real Estate transaction varies from state to state. If you were selling or buying your home in Frisco TX, you should know what does closing and what does funding means? Some of our client does not know that there is a differences between them.

What is the difference?


The easiest way to explain what is a closing is the act of seller(s) and buyer(s) signing all the document prepared by the title company. There are tasks being done prior to closing. The title company does all the behind the scene document preparation and the lender does their part to get loan approved and generate HUD-1 for the closing. Once all the documents are completed, seller(s) and buyer(s) will go to the title company to sign the documents. This can happen on the same day or on different days.

At this point, this is all signing documents. The transaction is not completed yet. The seller(s) still owns the house and the buyer(s) are not the owner just yet.


If the sellers have a mortgage, this is an important step. This is the act of the monetary changing hand. Well, no hands are involved, just a figure of speech. After the closing (signing of all the documents), the title company will begin transferring money to the appropriate parties. The title company will wire funds to pay off lender of the previous owner.

Until funding occurs,  buyer cannot take possession of the house because technically, speaking, it has not transfer ownership yet. No keys should be release to the buyers. Until funding occurs, seller is still responsible for the house and the mortgage.

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