What Does Clear to Close Mean?

May 17th 2024
Getting a clear to close means the underwriter has approved all your loan documents, and the bank will fund your mortgage as long as your credit or job status hasn't changed. This article will explain what happens after you get the clear to close, how long it takes to close, and if you can still be denied. We'll also cover what to do after clear to close, and answer some frequently asked questions to help you understand the final steps of buying a home.

hash-markTable of Contents

What Happens After Clear to Close?
How Long After Clear to Close Can You Close?
Is Closing Disclosure the Same as Clear to Close?
Can You Be Denied After Clear to Close?
What to Do After Clear to Close
Clear to Close FAQs

hash-markWhat Happens After Clear to Close?

  1. Closing Disclosure
  2. Final Walk-Through
  3. Closing Day

1. Closing Disclosure

Once the bank gives you the clear to close, they will check your credit one last time and make sure you still have your job. If everything is okay, they will prepare the closing disclosure for your loan. This document will be sent to you at least three days before your closing date.

The closing disclosure includes important details like your monthly mortgage payment, total closing costs, loan fees, and contact information. Review this information carefully and get ready for closing.

By now, your closing date will be set. If everything checks out, you'll soon be ready to officially close on your new home.

2. Final Walk-Through

The next step once you are clear to close is 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. 

3. Closing Day

Closing day is the final step to purchasing a home. The closing itself will typically take around an hour or two and will be attended by all the parties. At the closing, you'll finalize the paperwork and the title of the home will be transferred to you. You'll also need to prepare checks for the seller and closing costs in advance.

hash-markHow Long After Clear to Close Can You Close?

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 receive 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.

hash-markIs Closing Disclosure the Same as Clear to Close?

Receiving a closing disclosure means you are clear to close, but they are not exactly the same thing. You are technically clear to close once the underwriter approves your loan, which can take 24 to 72 hours before you get the closing disclosure.

Sometimes, you might not know you are clear to close until you get this document. Once you receive the closing disclosure, you have to wait at least three days before you can close. This gives you time to review the documents, make sure everything is correct, and prepare the checks you’ll need for closing day.

Make sure to confirm you received the closing disclosure as soon as possible to avoid any delays in your closing date.

hash-markCan a Loan Be Denied After Clear to Close?

Yes, it's possible for a loan to be denied after clear to close if your credit score drops or 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. 

hash-markWhat to Do After Clear to Close

Once you're clear to close, the best thing to do is to keep your situation as stable as possible. Don't change your finances, open new accounts, make expensive purchases, 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. 

hash-markClear to Close Bottom Line

Getting cleared to close is one of the last steps in the process of getting your mortgage loan approved. While it's not quite final approval, being clear to close means that the underwriter has approved your documents and cleared you to move forward with closing on the loan. 

hash-markClear to Close FAQs

1. Does clear to close mean approved?

Clear to close means the underwriter has approved the loan documents and the bank will fund the mortgage as long as your employment status or credit hasn't changed. Essentially, as long as you haven't taken on new loans, gotten fired, or started a new job, clear yo close means you're approved. 

2. Can you close the same day you get clear to close?

You cannot close on a house the same day you get clear to close. You won't need to wait too long, but it will take at least 3 days before you can close. 

3. Do lenders verify employment after closing?

In most states, lenders will verify your employment before the closing. However, lenders will verify employment after closing papers are signed if you live in a state where lenders are not required to fund the mortgage loan at closing. Typically they will simply conduct a final verbal verification of employment before funding the loan.

4. What happens a week before closing?

Once you receive the clear to close, you can expect to close within a week. The clear to close timeline moves pretty quickly. In that week the bank will verify your employment and run your credit once more and provide you with the closing disclosure. After signing the closing disclosure, you need to wait 3 days before the closing, during which you will perform a final walk-through and prepare the necessary checks for closing day.