What To Expect When Closing On A House Remotely
Sidney Richardson5-minute read
June 15, 2022
Closing on a home remotely isn’t just for out-of-state buyers or investors anymore. With the unique circumstances of COVID-19, handling complex transactions is easier and more common than ever before.
Are you considering closing on a mortgage remotely? Read on for our guide to what you should expect from remote closings.
What Is A Remote Closing On A House?
A remote closing, often called a virtual closing, is one in which identities are verified virtually and all documents are signed electronically. In states that allow for this, refinance transactions can be completed without having to meet in person.
With a remote closing, all parties can complete all or some of the same tasks from the comfort and convenience of their own home or office using a computer. Virtual closings often accompany eMortgages, a mortgage loan like any other that has been digitally originated, enacted with electronic signatures and virtually stored.
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How Does A Remote Closing Work?
With a virtual real estate closing, instead of meeting in person, the refinance clients involved may instead meet and proceed with the closing online.
For a fully online closing, you can expect to meet remotely using a virtual video conference. Any payments that must be processed for closing will likely be done via electronic transfer and mortgage documents will have to be signed electronically.
Not all remote closings are the same, however. Thanks to differing eClosing laws across the country, not every closing can be done entirely online. Depending on your state, the process may look a little different than what we described above. Currently, though, there are three main “models” of eClosing that you can expect to see: the hybrid method, remote online notarization (RON) and in-person e-notarization (IPEN).
Hybrid Closing Method
Online closing is legal in many states, but in others, things are a little more complicated. If the digital closing policy is hazy in your state, never fear – it’s still possible to close on a mortgage via a hybrid method.
By using the hybrid method, you can sign everything that doesn’t require a notary electronically before your actual closing date. Once that date arrives, you can meet with a notary or closing agent in person and sign the remainder of your documents to secure your financing.
While this method isn’t fully remote, it is perfectly legal across the country since you’re still signing the important documents in person. Since you can make payments and sign documents before your actual closing date, it also makes the process considerably faster. Most closings are still done using the hybrid method.
Remote Online Notarization (RON)
Remote online notarization, or RON, allows you to do the entire real estate closing process from the comfort of your home. Rather than confirm your identity in person, you’ll video conference during the closing process and present documents of identification such as your driver's license or passport.
Rocket Mortgage® doesn't offer RON on purchase closings at this time. It can be used to refinance in some states.
In-Person E-Notarization (IPEN)
In-person e-notarization, or IPEN, is the process of signing closing documents electronically but not remotely. An electronic notary is allowed to notarize without any paper involved but will need all parties involved in closing to be physically present.
Although this form of online closing has to be done in person rather than remotely, it cuts down paper waste by using electronic documents and helps make your closing process secure by confirming your identity in person. While IPEN is not a truly “remote” method of closing, it still has its benefits.
What Is A ‘Wet Signature’ And When Is It Required?
A “wet signature” refers to a real, physical signature on a document rather than an electronic one. Thanks to RON, technically all documents can be validly signed virtually if allowed in your state.
Some states without permanent RON bills may require that some of your mortgage documents, like promissory notes or other notarized closing paperwork, be signed physically and in person. Some states or even your mortgage lenders may require this for legal reasons, such as to prevent fraud.
Why Has It Taken So Long For The Real Estate Industry To Embrace Remote Closings?
Before COVID-19, electronic closings existed but were not as widely used. Closing costs are routinely paid via wire transfer in a typical real estate transaction. But if you weren't able to attend a closing, you would have to give someone power of attorney to sign on your behalf.
So what has prevented more widespread adoption of remote closings? Sometimes it's as simple as slow adoption of the underlying technology.
Some places in the U.S. also have complicated laws surrounding the closing process and may require a real estate attorney to be physically present for these events, thus making it impossible to make the closing process fully remote.
Will Remote Closings Become The New Standard?
Remote closings are a convenient new way to tackle the process of getting the keys to your home, and they certainly seem like the logical next step in the world of real estate. You can buy a car remotely and have it delivered straight to your doorstep, so why not make it possible to buy a home from your computer as well?
It makes sense that this would be the direction closings may go in the future, but in terms of the present, remote closings might still have a way to go as they aren't yet legal everywhere.
Rocket Mortgage® is dedicated to making the mortgage process easier going forward. Rocket Mortgage® is currently able to perform online closings in some form in all 50 states – so even if your state forbids the use of RON, you can still complete at least a portion of your closing digitally using the hybrid method or IPEN.
The Bottom Line: Technology Makes Real Estate Closings More Convenient
Remote closing is a faster and more convenient method of closing on a mortgage, but the rules aren’t the same for all closings across the U.S. Make sure to research remote notarization laws in your state before deciding if this method of closing is for you.
Regardless of how simple the mortgage process may be when done remotely, be sure you know what to bring to the closing table before the big day.
If you're ready to move forward with a mortgage, you can apply online or give us a call at (833) 326-6018.
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