DEFINITION of 'Dry Loan'

A mortgage where the funds are supplied after all of the required sale and loan documentation has been completed and reviewed. For the buyer and seller, dry loans provide more insurance that the transaction will be completed without problems. Conditions surrounding the requirements of dry loans differ based on state laws.

BREAKING DOWN 'Dry Loan'

In a dry-funded mortgage, the seller will not receive any money until all necessary paperwork has been reviewed by the lending financial institution. Waiting for the documentation to be processed before any funds are transferred ensures the legitimacy of the sale. This process deters fraudulent activities in real estate transactions.

RELATED TERMS
  1. Wet Loan

    A mortgage in which the funds are obtained before all required ...
  2. Dry Closing

    A type of real estate closing in which the entire closing requirements ...
  3. Combination Loan

    1. A transaction consisting of two separate loans for the same ...
  4. Fallout Risk

    The lending risk that occurs when the terms of a loan are confirmed ...
  5. Low / No Documentation Loan

    A category of loans which generally fall into the Alt-A sector ...
  6. Wrap-Around Loan

    A loan that is most commonly used with property with an outstanding ...
Related Articles
  1. Investing

    Financial Institutions: Stretched Too Thin?

    Find out how to evaluate a firm's loan portfolio to determine its financial health.
  2. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  3. Insights

    An Introduction to Government Loans

    Government loans further policymakers' efforts to create positive social outcomes by offering timely access to capital for qualified candidates.
  4. Investing

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  5. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  6. Managing Wealth

    Unsecured Personal Loans: 8 Sneaky Traps

    If you are seeking a personal loan, be aware of these pitfalls before you proceed.
  7. Personal Finance

    Reduce Interest With An All-In-One Mortgage

    "Offset" mortgages combine a checking account, home-equity loan and mortgage into one account.
  8. Personal Finance

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  9. Personal Finance

    Personal Loans vs. Car Loans

    How to tell whether a personal loan or a car loan is better for you.
  10. Personal Finance

    Different Needs, Different Loans

    Find out what options are available when it comes to borrowing money.
RELATED FAQS
  1. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>
  2. Are FHA loans assumable?

    Learn the advantages and disadvantages of assuming an FHA-insured mortgage. Assuming loans with lower interest rates can ... Read Answer >>
  3. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  4. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  5. What are the differences between delinquency and default?

    Find out more about loan delinquency, loan default, and the difference between a loan borrower defaulting and being delinquent ... Read Answer >>
Trading Center