There are many terms and phrases you may hear during the loan process that are either confusing, complicated, or are misunderstood entirely. While a great lender like Ruoff Mortgage’s loan officers will take the time to explain terms to you, other lenders may not. One of those terms is “clear to close”.
It is a phrase that lenders use to denote a specific step in the process that their borrower has reached. It’s also one of the phrases that means your loan is almost ready to be finished! Officially, the term clear to close means that your loan documents have been reviewed by an underwriter and you have been approved for the loan.
All throughout the loan process, you have been provided information to your loan officer. Things like bank statements, IDs, W2s, paystubs, and plenty of other things. All of these documents must then be sent to an underwriter. An underwriter reviews the pending loan, borrowers, and property to ensure that the loan is a secure investment for the lender and the borrower. Underwriters protect both entities by making sure the mortgage loan amount matches the property’s appraised value and that the borrower is able to afford the monthly payments on that property.
While your Loan Officer and underwriting team do all the hard work of getting you ready to close on your home, you can help things move along faster.
Respond in a timely manner. When your LO requests certain documents, it's because those documents help your lender decide whether you're a good candidate for a specific loan. The sooner you get those documents to your Loan Officer, the sooner you can get approved and on your way to Clear to Close.
Have all your paperwork ready. All those documents your LO needs? Get them together and ready for when they're requested. I listed the documents you're likely to need above, but you should be ready to deliver even more like your driver's license and social security card.
Don't make any big financial decisions. Hold off on buying anything big until after your loan closes. This includes huge ticket items like cars or boats, but also can include smaller things like furniture or a television. Rule of thumb: don't take out any loans or credit cards during this time. Don't empty your bank account. These things will make the underwriters unable to do their job, and they will have to request all those documents of you all over again because you have made a big change to your financial situation and may no longer qualify for a loan.
Once your loan is in the clear to close stage, you will receive a Closing Disclosure from your loan officer. This document provides all the finalized details about your loan including terms, your locked-in interest rate, the monthly payments you’ll be expected to make, and any other fees associated with the closing of your home.
Then, you’re off to the closing table to sign all the paperwork necessary to make the purchase of your house official. Here, your title company will oversee the transfer of the property from the seller to the buyer. Once you sign all the paperwork, you will walk out the door with the keys to your new home.
Ruoff Mortgage can make this usually grueling process of signing dozens of documents much, much faster with their Digital Closing Experience which allows you to electronically sign many of the closing documents ahead of time straight from your computer or mobile device through the Loan Butler app.
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