Clear To Close: What To Expect And What Happens Next
Victoria Araj5-minute read
May 26, 2021
After working through the many stages of the mortgage application process, most home buyers are beyond relieved when their lender tells them they are clear to close – and for good reason. With underwriting, document verification and the offer out of the way, it’s a good sign that your lender will grant you the loan you need.
All that said, just because you’re clear to close doesn’t mean you’ve reached the finish line. You’ll need to complete a few final steps before you get the keys to the property.
What Does ‘Clear To Close’ Mean?
“Clear to close” simply means that you’ve met the requirements and conditions to close on your mortgage. At this stage, your lender has fully inspected your documents and verified that you meet the expectations of the type and amount of mortgage you’re requesting.
Once a borrower is clear to close, lenders will typically start preparing for the closing day. Your loan officer will schedule a date and time for your closing meeting and contact your title company, real estate attorney or other parties who plan on attending. Your lender will also assemble any final documents that you’ll need to sign on your closing date.
How To Get Your Loan Cleared To Close
Reaching clear to close requires a considerable amount of work for both the lender and the borrower. Missing even one step could be the difference between a fully cleared loan and a denied application. To get your mortgage cleared for its closing day, you’ll have to complete the following steps beforehand:
- Provide documentation. Your lender will need to see a number of documents before they fully approve your application. First, your mortgage provider will want to see verification of your income and assets, such as pay stubs and recent bank statements. Then you’ll need to present your current liabilities, which can help your lender determine your debt-to-income ratio. Finally, you might need to provide your lender with written permission to access your credit score.
- Make an offer. If you’re buying a home, before you make it to closing day, the seller must accept your offer on the property. The most successful buyers know that making an offer requires a solid strategy, as there are so many variables that affect the final amount you put on the table. Consider how long the house has been on the market, the number of repairs you’ll need to make and the number of other buyers who also have their eye on the home.
- Have the home appraised and inspected. Appraisals and home inspections are both critical steps in the home buying process, though they serve two very different purposes. During your appraisal, a third-party appraiser will determine the property’s fair market value, which assures both you and your lender that the amount you’ll pay for the home aligns with its actual worth. Home inspections, on the other hand, help buyers identify issues with a home before they purchase it.
- Get approved by underwriting. The underwriting process helps lenders gauge the level of risk they will take on if they agree to give you a loan. Underwriters will not only look at the documents you’ve submitted, but they will also further inspect the details surrounding your income, credit history, DTI, assets and the amount and type of loan you’ve requested.
Working through each step is part of the reason why it takes 30 – 45 days to close on average. If you want to reach clear-to-close status as quickly as possible, make sure you prepare your documents in advance, fill out your mortgage application to completion, satisfy all of your underwriting requirements and keep an open line of communication with your lender.
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What Happens After You’re Clear To Close?
Once your lender has notified you that you are clear to close, a good majority of the mortgage process will be behind you. However, there are still a few important stages standing between you and homeownership.
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 you’ll owe 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.
Even if you buy the house as-is, a final walkthrough is your chance to ensure the property is in the condition you and the seller have agreed upon. Walkthroughs 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 walkthrough. But if there is anything wrong with the house, this is your last chance to catch these problems before they become your responsibility.
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.
Can A Lender Still Deny Your Loan?
Clear-to-close buyers aren’t usually denied, but there are circumstances where a lender may decline an applicant at this stage. These rejections are usually caused by drastic changes to your financial situation. Leaving your job, applying for a new credit line or taking out another loan can all be red flags for your mortgage lender. If it’s possible, you should avoid making any drastic changes until the house is yours.
How Long Does It Take To Close After You’ve Been Cleared?
Most buyers won’t have to wait very long to meet at the closing table once they’re clear to close. With that in mind, you should expect at least a 3-day buffer between the time you receive your Closing Disclosure and the day you close.
You should also be aware that your closing timeline may take longer if you encounter any roadblocks between the time you are clear to close and the closing itself. If, for example, you notice significant issues with the home during your final walkthrough, you might need to postpone your closing meeting to give the seller enough time to make these repairs.
The Bottom Line: ‘Clear To Close’ Means You’re In The Home Stretch
Being clear to close isn’t the final destination for your loan, but most home buyers can look forward to a closing date right around the corner.
Similar to the other steps in your mortgage application, reaching your closing day as quickly as possible will require you to have an understanding of the clear-to-close process and what comes after. As always, constant communication with your mortgage provider is key to moving your application forward quickly, which is why it’s so important to work with a lender you can fully trust.
Looking for more information on how you can prepare for your closing day once you’re clear to close? Be sure to review our complete guide to closing on a house.
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