What is a “Clear to Close”?
Behind the scenes, your mortgage lender and the underwriters have been working to get your loan approved. Once they’ve received the necessary documentation and completed the in-depth verification and research process, you will be given the “Clear to Close.” This means your loan is approved and the bank will provide the financing needed to purchase your new residence.
Before a lender will give you the “Clear to Close” status, these are the items they will need and/or verify:
- Substantiation of your information, including employment, assets, debts, tax returns, and more.
- The bank will check your credit one final time just before approving your loan to ensure you are still credit-worthy.
- Making sure your future home appraises at value.
- Making sure the home is properly insured via homeowner’s insurance and any required supplemental insurance policies (i.e. flood)
Once the bank provides the “Clear to Close” notification, they then send all of your loan information to the title company. The escrow officer will incorporate the bank’s file with the title company’s file on the property you’re purchasing. This is the stack of paperwork you will be required to sign prior to closing.
At this time, the title officer may contact you to find out how you wish to hold title on your new home. There are eleven different ways in which to hold title, each is described in detail here. If you have any questions on the option that best suits your situation, we suggest consulting your attorney or tax advisor.
Now that you are assured a mortgage, you are one step closer to becoming a homeowner! We can now schedule your sign off at the title company as well as your final walk through at the property. But prior to that, you’ll need to prepare the remainder of your down payment.