Buying a home is an exciting affair. And one of the most exciting moments – besides getting your house keys – is learning that your mortgage has been declared “clear to close.” Based on the name, you may think that means everything is complete and nothing else is needed.
Unfortunately, that’s not 100% accurate. There’s still plenty that needs to happen before you reach the closing table.
What Does Clear to Close Mean?
If you’ve received a “clear to close” status on your loan, congratulations! You’re close to the finish line.
“Clear to close” means an underwriter has approved your loan documents and that any conditions that were required for the loan to be approved have been met. It also means your lender is ready to confirm your closing date with the title company or attorney.
Can My Loan Still Be Denied?
While it’s rare, the short answer is yes. After your loan has been deemed “clear to close,” your lender will update your credit and check your employment status one more time. Usually, a month or two will have passed since you filled out your loan application, and the lender wants to make sure you haven’t taken out any other loans or switched jobs during that time. If you have made changes in either of these areas, it could impact your loan.
For example, if you apply for a mortgage and then open a new credit card to buy furniture or appliances for your new home, it will increase the amount of debt you are responsible for and will change your financial profile. This could cause you to no longer qualify for your new home. In addition, if you miss paying any monthly bills since applying for your loan, it could impact your credit score and may impact your ability to qualify for the program you originally applied for.
Your lender also needs to confirm your job status before closing. This is typically done by placing a call to your employer’s Human Resources Department. If you quit or lost your job since your loan approval, your loan could be denied. Even if you left your job for another job with equal pay, your loan could still be denied, or delayed, depending on the type of loan you have.
What to Do After Getting a Clear to Close
The best thing to do after getting a CTC is nothing. Keep paying your bills on time and don’t take out any new credit. If you’re tempted to buy furniture for your new home, wait until after your loan closes.
Also, don’t open or close any bank accounts or make any large transfers, deposits or withdrawals if you can help it. Just try to keep your finances as stable as possible.
It probably goes without saying, but don’t change jobs, either. If you do plan a job change, alert your lender as soon as possible so that they can help you navigate that transition with your loan in process.
Lastly, if your lender has any questions about your finances or needs any additional documents or information, don’t panic. It’s probably a response to something that came up on one of these last minute “checks” to make sure nothing in your profile has changed. So, just respond as quickly as possible.
If you have more questions about getting a mortgage and what you should do – or not do – to ensure your closing goes smoothly, just send a note to inquiries@rightbyyoumortgage.com or give us a call at 1-877-552-2242. We’d be happy to help!
