Wet Loan

Written By
Paul Tracy
Updated July 28, 2021

What is a Wet Loan?

A wet loan is a mortgage in which the borrower gets the funding before all the paperwork is done.

How Does a Wet Loan Work?

Let's assume John Doe wants to buy the house for sale at 123 Main Street. The market is hot, and John needs to guarantee to the sellers that he can close the loan in under two weeks or the sellers won't take his offer.

Accordingly, John asks for a wet loan. The bank funds the mortgage and gets the closing done in two weeks even though it hasn't completed all the paperwork. For this he pays an extra fee.

After the paperwork is done, the bank reviews the documentation to ensure that everything is as it should be.

Why Does a Wet Loan Matter?

Some states prohibit wet loans because the risk of fraud or mistakes is much higher. However, the ones that permit wet loans also give potential home buyers the opportunity to jump on deals faster.

Activate your free account to unlock our most valuable savings and money-making tips
  • 100% FREE
  • Exclusive money-making tips before we post them to the live site
  • Weekly insights and analysis from our financial experts
  • Free Report - 25 Ways to Save Hundreds on Your Monthly Expenses
  • Free Report - Eliminate Credit Card Debt with these 10 Simple Tricks
Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Wet Loan.
Be the first to ask a question

If you have a question about Wet Loan, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

If you have a question about Wet Loan, then please ask Paul.

Ask a question Read more from Paul
Paul Tracy - profile
Ask an Expert about Wet Loan

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms