Wet Loan

AAA

DEFINITION of 'Wet Loan'

A mortgage in which the funds are obtained before all required documentation is completed. Wet loans allow the borrower to purchase property in a more timely fashion and complete the required paperwork after the transaction. Conditions surrounding the use of wet loans differ based on state laws.

INVESTOPEDIA EXPLAINS 'Wet Loan'

In a wet-funded mortgage, the property seller will receive funds right away. After the transfer of funds, the bank will receive the loan documentation for review. Wet loans expediate the purchasing process by allowing the sale to occur before the paperwork. However, the added benefit of fast transactions comes at the price of increased risk. Because the seller receives funds before the paperwork is approved, the possibility of fraud and a loan default is greater.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
  3. Dry Loan

    A mortgage where the funds are supplied after all of the required ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Proof Of Funds - POF

    A document that demonstrates that a person has the ability and ...
  6. Warehouse Lending

    A line of credit extended by a financial institution to a loan ...
Related Articles
  1. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  2. To Rent Or Buy? The Financial Issues
    Home & Auto

    To Rent Or Buy? The Financial Issues

  3. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  4. Mortgages: How Much Can You Afford?
    Budgeting

    Mortgages: How Much Can You Afford?

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center