One of the significant milestones of the mortgage process is getting a clear to close. Essentially, clear to close means all the loan documents have been approved by the underwriter, and the bank will fund your mortgage as long as your credit or employment status hasn't changed. But what happens after clear to close, and can you still be denied? Here's what you need to know.
You can close as soon as three days after being cleared to close, assuming you receive closing disclosure the same day. If you receive notice that you're cleared to close prior to receiving the closing disclosure, you'll need to wait a bit longer as you must receiving the disclosure at least three days before closing. In most cases, you can expect to close 4 to 7 days after you're clear to close.
Once the bank gives you the clear to close, they'll start preparing the final mortgage documents for your loan. They'll also need to run your credit one last time and re-verify your employment status. After clear to close, the next major milestone is when the bank sends you the closing disclosure, which you must receive at least three days before the closing date. The closing disclosure will include the terms of the loan, including the monthly mortgage payment, the total closing costs, the loan fees, loan disclosures, and contact information. You'll want to review this information and prepare for closing. The closing date will also have been finalized by now, and if everything looks good, it's just a matter of time before you formally close on the home.
The next step will be the final walk-through, which typically takes place on closing day. While you perform the final walk-through, it's essential to make sure the house is in the agreed-upon condition and that the seller has taken care of any promised repairs. If everything looks good, you can proceed to the closing.
Receiving a closing disclosure means you are clear to close, but the terms aren't entirely synonymous. Technically speaking, you are clear to close the moment the underwriter signs off on the loan, and it can take between 24-72 hours from then to receive your closing disclosure. Where the confusion lies is that you may not always be notified that you're clear to closed prior to receiving the closing disclosure.
Once you've received the closing disclosure, you have to wait at least 3 days before you can close. That gives you time to review the documents, ensure everything is correct, and prepare the checks you'll need for closing day.
You must confirm receipt of the closing disclosure as soon as possible to prevent your closing date from being pushed back.
Yes, it's possible to be denied after clear to close if your credit score drops or if you lose your job. It's best to think of clear to close as approval that is contingent on your credit and employment, which the bank will check once more after clear to close. This check can happen when they send you the closing disclosure or even as late as closing day.
The best way to ensure your loan isn't denied after clear to close is to keep your job, continue paying all your bills on time and avoid making any purchases or taking out new loans.
Once you're clear to close, the best thing to do is to keep your situation as stable as possible. Don't make any changes to your finances, open new accounts, expensive purchase, or start a new job. Just wait until you receive your closing disclosure, and confirm receipt so that you can move forward with the closing efficiently and enjoy your new home.