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
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.
Does clear to close mean approved? ›
“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.
How long does it take an underwriter to clear to close? ›
What not to do after clear to close? ›
After getting a clear-to-close, avoid actions that would change your financial profile or creditworthiness, including taking on new debts, making big purchases like a car or expensive appliances, or applying for new credit cards. Also, avoid changing your employment status or job title.
Why do you have to wait 3 days after clear to close? ›
Your underwriter likely walked through the loan terms during the pre-approval process and would only have made a few adjustments based on the final price and inspection of the house. Once the three-day waiting period is complete, you can notarize your documents, close on the home, and start the move-in process.
What is the 7 day closing rule? ›
7 Days from Initial Disclosure –
Mortgage Closing Waiting Period. The Rule prohibits the lender and consumer from closing or settling on the mortgage loan transaction until 7 business days after the delivery or mailing of the TILA disclosures, including the Good Faith Estimate and disclosure of the final APR.
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.
Do lenders pull credit day of closing? ›
Do Lenders Check Your Credit Again Before Closing? Yes, lenders typically run your credit a second time before closing, so it's wise to exercise caution with your credit during escrow. One of your chief goals during escrow should be to ensure nothing changes in your credit that could derail your closing.
What happens 3 days before 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.
What is the last step of the underwriter? ›
Step 5: The underwriter will make an informed decision.
The underwriter has the option to either approve, deny or pend your mortgage loan application. Approved: You may get a “clear to close” right away. If so, it means there's nothing more you need to provide. You and the lender can schedule your closing.
Just like buying anything on credit before your loan hits the closing table, it's harmful to your loan if you finance new furniture before completing the final step in the mortgage process. In fact, there are a few different reasons why financing furniture early is detrimental to your loan.
What happens if my credit score drops before closing? ›
If your financial situation changes or your credit score takes a hit before closing day, the lender could deny your mortgage. Making major purchases, applying for new credit or changing jobs are common mistakes that could put your mortgage approval at risk.
Do underwriters work on weekends? ›
Underwriters may occasionally work late or on weekends, particularly during high-volume periods or to meet tight deadlines for policy approvals. While it's not the norm, the workload can fluctuate with market demands.
Can a bank reject a loan after approval? ›
Key takeaways. Under rare conditions, a car loan can be denied even after it was already approved. It's important to review all loan documents and pay attention to any contingencies listed on the loan. A preapproval does not mean that you have been approved for a loan.
Why would a loan be denied at closing? ›
Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.
Does closing disclosure mean underwriting is complete? ›
Receiving your Closing Disclosure basically indicates you're almost there, but not quite done with the mortgage process. Your loan officer may check your credit again before the mortgage closes. Any drastic changes in your reports could result in a delay of your closing date or worse.
