What Is the Disbursement Date on a Closing Disclosure?

The Closing Disclosure is a comprehensive document provided to homebuyers, outlining the final terms of their mortgage loan. This five- or six-page form details the loan terms, projected monthly payments, and all associated fees and costs. Understanding the various dates within this document is important for navigating the home-buying process. The “disbursement date” marks a key financial milestone in the real estate transaction.

Defining the Disbursement Date

The disbursement date is the day loan funds are transferred from the lender to the appropriate parties involved in a real estate transaction. It represents the actual movement of money, ensuring the seller receives proceeds and other transaction costs are covered. It is also commonly referred to as the funding date. While often coinciding with the closing date, the disbursement date is a distinct event.

The closing date is when all final documents are signed by the buyer, seller, and other parties, formalizing the agreement. However, the actual transfer of funds may not occur until the disbursement date. This distinction is especially relevant in “dry funding” states, where funds are released only after all documents are verified, potentially creating a delay of a few days between signing and funding.

Finding and Understanding It on the Closing Disclosure

The disbursement date is straightforward to locate on your Closing Disclosure. This date is typically found in the top left-hand corner of the first page of the document. Its placement ensures that borrowers can easily identify when their loan is expected to be funded.

This date signifies the recorded timeline for the transfer of funds related to your home purchase or refinance. For a purchase, the disbursement date is often considered the “close of escrow” date. In the case of a primary residence refinance, the disbursement date is typically the first business day following the three-day “right of rescission” period.

What Happens on the Disbursement Date

On the disbursement date, several financial and physical events take place, finalizing the real estate transaction. The mortgage lender wires the loan funds to the title company or escrow agent. This action “funds” the loan, making money available for distribution. The title company then disburses these funds according to the Closing Disclosure.

This disbursement includes paying off any existing liens on the property, settling various third-party fees, and transferring the net proceeds to the seller. The deed to the property is recorded with the local government, transferring legal ownership to the buyer. Once these financial and legal requirements are met, the buyer gains legal access to the property and receives the keys, completing their home purchase. Interest on the new mortgage loan generally begins to accrue from this disbursement date.