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. Default

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

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

    A line of credit extended by a financial institution to a loan ...
  5. Secondary Mortgage Market

    The market where mortgage loans and servicing rights are bought ...
  6. Primary Mortgage Market

    The market where borrowers and mortgage originators come together ...
Related Articles
  1. Credit & Loans

    4 Steps To Attaining A Mortgage

  2. Home & Auto

    To Rent Or Buy? The Financial Issues

  3. Personal Finance

    Understanding Your Mortgage

  4. Budgeting

    Mortgages: How Much Can You Afford?

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center