How Long Does Funding Take After Closing a Refinance?

After signing refinance closing documents, the time until funds are disbursed is not immediate and depends on several factors. Understanding this process can help manage expectations.

The Rescission Period

For certain refinances, a mandatory waiting period called the Right of Rescission applies. This period is for refinances of a primary residence, especially cash-out refinances or those with a new lender. It does not apply to investment properties, second homes, or rate-and-term refinances with the same lender.

Established by the Truth in Lending Act (TILA) to protect consumers, this right allows borrowers three business days to cancel the loan agreement after signing without penalty. During this period, the lender cannot disburse funds.

A business day for rescission includes all calendar days except Sundays and federal holidays. The three-day period begins the day after all borrowers have signed the mortgage contract and received required disclosures. For instance, if closing occurs on a Friday before a non-holiday Monday, the rescission period ends at midnight on the following Tuesday.

Funding Disbursement Timeline

Once the rescission period concludes, or immediately after closing for loans not subject to rescission, the lender initiates the funding process. This marks the actual transfer of money.

For refinances subject to rescission, funds are generally disbursed within 1 to 3 business days after the three-day period expires. For example, if the rescission period ends on a Tuesday, funds might be released by Wednesday or Thursday. For loans not subject to rescission, such as for investment properties, funding can occur much sooner, often within 24-48 hours after closing.

Funding refers to the lender releasing loan proceeds. These funds are typically sent to the title company, which manages distribution to pay off existing debts or disburse cash-out amounts. The disbursement date is usually indicated on the Closing Disclosure.

Factors Affecting Funding Speed

Several factors can influence how quickly refinance funds are received, beyond the legal rescission period. Weekends and holidays can extend the timeline significantly, as banks and title companies do not process transactions. For example, if a rescission period ends on a Friday, funding might not begin until the following Monday or Tuesday.

The efficiency of the lender and title company also plays a substantial role. Institutions have varying internal procedures and processing speeds, leading to differences in how quickly they release funds. Some lenders process disbursements within 24-48 hours after the rescission period, while others take longer.

Discrepancies, errors, or missing documents discovered during closing can cause delays. Lenders require all paperwork in order before releasing funds; minor issues may necessitate additional review or re-signing, pushing back the funding date. The time of day a closing occurs also impacts funding initiation; late afternoon closings may delay the process until the next business day.

Receiving Your Funds

Borrowers receive refinance funds through specific methods, depending on the refinance type. For cash-out refinances, where a borrower receives a portion of their home equity in cash, wire transfer is the most common and fastest method. Funds are usually wired directly to the borrower’s bank account, often arriving the same day the wire is initiated by the title company.

Alternatively, some lenders or title companies may issue a physical check for cash-out funds. This method takes longer due to printing and mailing, adding several days to the process. If bank account information for a wire transfer is not provided or is incorrect, a check may be sent.

For most rate-and-term refinances, the new lender directly pays off the old mortgage and any other debts included in the refinance. In these instances, the borrower does not directly receive funds. It is advisable for borrowers to confirm the disbursement method with their lender or title company and to monitor their bank accounts for incoming funds or confirmation of payoffs.