Once your lender has notified you that you’re clear to close, a good majority of the mortgage process will be behind you. However, a few important stages still stand between you and homeownership.
Closing Disclosure
After you’ve cleared underwriting and conditional approvals, your loan officer will send you a Closing Disclosure. This five-page document outlines the terms and conditions of your mortgage agreement, providing a comprehensive overview of all of the costs and fees you’ll pay when you provide your signature.
Because you’re on the hook for any and all expenses mentioned, understanding your Closing Disclosure is one of the most important steps of the home buying process. Make sure you’re not signing a document that contains errors or clauses that will work against your repayment plan.
Final Walk-through
Even if you buy the house as is, a final walk-through after you receive the Closing Disclosure is your chance to ensure the property is in the condition you and the seller have agreed upon. Walk-throughs aren’t technically a required step after you’re clear to close, but skipping out on a final inspection could be a costly mistake.
In most cases, the home should be ready to go by the time you conduct the last walk-through. But if anything is wrong with the house, this is your last chance to catch these problems before they become your responsibility.
Closing Day
With everything else in order, you’ll finally reach the long-anticipated closing day. Your closing meeting is when the home title officially transfers and you become the new legal owner of the property.
Your closing day is all about tying up any loose ends and sealing the deal. This includes signing all paperwork, updating the deed and paying your down payment and closing costs.
FAQs
During this window, buyers can expect to schedule their closing date and time, review their final mortgage documents, and wire their funds for purchase. Buyers should not make life or credit changes after their loan is CTC, because changes nullify mortgage approvals and the clear-to-close status can be revoked.
What happens when you get the clear to close? ›
“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 something go wrong after clear to close? ›
While a denial after a clear to close status is rare, it is still possible. Even though the underwriter has approved the loan, they will run your credit and verify employment one more time before closing. If anything has changed since you began the loan process, it can affect your approval.
How long does it take an underwriter to clear to close? ›
Generally, it can take anywhere from a few days to a few weeks for an underwriter to clear a loan to close. Factors that can expedite the process include thorough documentation, prompt responses to any requests for additional information, and a well-prepared loan file.
Is final approval and clear to close the same thing? ›
No. Clear to close only means that the underwriter has cleared your mortgage application to move forward with signing the documents to close, but it is not final approval. There are a few more steps and actions to take before final approval, like an appraisal and inspection.
What is the 3 day rule for closing? ›
Your lender is required by law to give you the standardized Closing Disclosure at least 3 business days before closing. This is what is known as the Closing Disclosure 3-day rule. This requirement is thanks to the TILA-RESPA Integrated Disclosures guidelines, which went into effect on October 3, 2015.
Do they run your credit the day of closing? ›
Credit is pulled at least once at the beginning of the approval process, and then again just prior to closing. Sometimes it's pulled in the middle if necessary, so it's important that you be conscious of your credit and the things that may impact your scores and approvability throughout the entire process.
Can you be denied after closing? ›
Your lender is bound by law to stick to your contract. After closing, your lender cannot go back on the arrangement they have made with you. Your loan can be denied anytime from the point of application to the point of closing.
Can a deal fall through after closing? ›
There are numerous reasons a deal could fall through on or after closing day, including buyer's/seller's remorse, missing documents, and more. But it's also possible your loan could be denied at the last minute. And you, the buyer, don't have financing, the deal is off.
What happens if you don't have all the money at closing? ›
If you don't have the money to cover closing costs, you could get a no-closing-cost mortgage. This type of home loan doesn't eliminate closing costs. Instead, it rolls your closing costs into the loan principal, so you repay it over time with interest.
Once the underwriter has determined that your loan is fit for approval, you'll be cleared to close.
How often do loans fail in underwriting? ›
How often does an underwriter deny a loan? A mortgage underwriter typically denies about 1 in 10 mortgage loan applications. A mortgage loan application can be denied for many reasons, including a borrower's low credit score, recent employment change or high debt-to-income ratio.
What is the next step after clear to close? ›
After you've been cleared to close you'll need to sign your closing disclosure, do a final walkthrough and attend your closing.
What can go wrong after clear to close? ›
Yes, you could get denied after you've been cleared to close. In the days leading up to your closing, do your best to make sure nothing happens that makes you look like a riskier borrower. Your safest bet is to avoid making any financial moves during this period, such as: Apply for any new credit cards or loans.
What is the last step in the closing process? ›
The closing ceremony (or closing day) is the final step in the closing process. The buyer, seller, and closing attorney must be present at the agreed-upon date and time to finalize the sale.
What does clear closure mean? ›
Closure or need for closure (NFC), used interchangeably with need for cognitive closure (NFCC), are social psychological terms that describe an individual's desire for a clear, firm answer or peaceful resolution to a question or problem to avert ambiguity.
Does closing disclosure mean loan is approved? ›
Your loan is approved, or deemed “clear to close,” before you receive the closing disclosure. Be aware, however, that if you make a major financial change (like quitting your job or opening a new line of credit) around this time, your lender could still deny your loan.
Can a loan be denied after closing? ›
If your financial situation changes suddenly, for example, a significant loss of income or a large amount of new debt, then your loan could be denied. Issues related to the condition of the property can lead to a loan denial after closing.
Is the closing disclosure the last step? ›
No, a closing disclosure is not the same as final approval. It is a document that outlines the terms of your mortgage loan, including the interest rate, fees, and other charges. You will still need to go through the underwriting process and receive final approval before closing on your loan.
