When you’re buying your first home, receiving a “clear-to-close” on your mortgage can feel like a major win – and it should. It’s a sign that you’re in the final stretch toward becoming a homeowner. But it’s still too early to pop the champagne cork.
After being deemed clear-to-close, there are still a few remaining steps to navigate to ensure a successful closing. In this blog, we’ll go over what to expect – and remind you what to do and what not to do as your closing date approaches.
What Clear-to-Close Means
Being “clear-to-close” means your lender’s underwriter has reviewed all your loan documents and determined that all underwriting conditions have been satisfied, and your loan has been approved. At this stage, the lender will schedule a closing date with the title company or attorney.
Before the actual closing date, however, the lender will make one final review of your credit and verify things like your employment status. This is to ensure that no significant changes have occurred since your initial application that would affect your ability to repay the loan. For example, if you have lost your job or changed jobs, it could lead to your loan being denied or delayed, even if your new job pays the same as your old one.
For this reason, it’s a good idea to maintain the status quo when it comes to your finances. That means continuing to pay your bills on time, avoiding any major career changes, and refraining from opening new lines of credit or making large purchases, deposits or withdrawals. Any of these actions could raise questions about your ability to repay your loan and delay your closing date, or even lead to a loan denial.
Reviewing Documents
The final stage of the loan process involves organizing, verifying, and carefully scrutinizing essential documents to avoid any last-minute surprises that could delay or derail your closing.
For example, one of the most important documents you’ll receive from your lender is the Closing Disclosure. This document provides a detailed breakdown of your loan terms, estimated payments, and all closing costs. By law, your lender must send this to you at least three business days before closing. Review this document carefully and compare it to your original Loan Estimate to ensure that the terms match what you initially agreed upon. If there are discrepancies, let your loan officer know immediately.
If you’re buying a preexisting home, be sure to thoroughly review the seller’s disclosure, which lists all known defects and issues with the property. Depending on the state you’re purchasing a home in, this may include past repairs or other conditions that are required to be disclosed to a homebuyer.
Additionally, a title company or real estate attorney will examine all title documents to ensure there are no existing liens on the property and that the seller has the legal right to sell it. This is to prevent any legal obstacles that could delay or even cancel the transaction.
Getting a Closing Guarantee
Even with meticulous attention to every detail, sometimes unforeseen circumstances beyond your control can arise. To mitigate the risk, choose a lender that not only offers competitive products but provides some form of assurance that your loan will close on time.
For instance, Right By You Mortgage offers homebuyers peace of mind through our Closing Guarantee program, which is available on all our conventional, FHA and VA loan products. If you enroll in the program when you apply for your loan and respond to any information requests from us within two days, we pay you and the home seller $500 if your home doesn’t close on time.
Have additional questions about “clear-to-close” or want to learn more about our wide range of home financing options? Find a local loan officer near you or email us at inquiries@fidelitybanknc.com to get started.
