Getting a mortgage is not easy. You have to answer a lot of questions, provide a lot of documents, and do a lot of legwork. Once you hear those glorious words ‘clear to close,’ though, it all becomes worth it. Just what does it mean when a lender says that you can close? We help you understand this important term below.
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The End of a Long Process
Essentially, hearing ‘clear to close’ means the lender finished underwriting your loan. They are now onto the next process of ordering your closing documents. It’s also the time that the lender will discuss a closing date and time with you and the closing agent (usually the title company).
Before you start jumping for joy just yet, though, you have a few more hurdles to get through.
The Final Verifications
Lenders usually have what they call ‘prior to funding’ conditions. This comes after you’ve satisfied all other conditions to get through underwriting. Typically, you’ll have already gone through the income verification, appraisal verification, and title work process. But even though the lender drew up your closing documents, they still need to verify a few things:
- Your income/employment – Lenders need to make sure that nothing has changed with your income or employment during the underwriting process. It’s not unusual for underwriting to take 30 – 45 days. A lot could happen in that time. This is why the lender usually makes one more verification phone call to ensure that you are still with the same employer and working the same position.
- Your credit score – Lenders also need to verify that you didn’t do anything with your credit. In other words, did you take out any new loans? Did you stop making payments on your bills? Are you in over your head in credit card debt? If you changed anything financially, the lender will catch it on your updated credit report. A glitch in your credit history could cause a hiccup in your ability to close.
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If the verifications come back okay, you can then move onto the closing.
What Happens Next?
Assuming everything comes back okay, you are ready to move onto the final steps of closing on your home. These steps include:
- Walk-through the home – You’ll want to take this time to take a final walk-through of the home. Did the seller make any necessary repairs? Does the home look to be in as good of condition as it was when you bid on it?
- Wiring the funds – The lender will need to wire the funds to the title company for the closing. You should discuss the funding date with your lender, as some fund same day while others fund the following business day.
- Signing the documents – The final step in the VA closing is signing the documents. The Closing Disclosure is the document that shows the actual closing fees you will pay. You should have access to this document prior to the closing so that you have time to review it to ensure the figures are close to what the lender quoted you at the start of the process. You’ll sign a large pile of papers, including the Mortgage Deed and Note, both of which are important documents.
Once the closing is complete and funded, you will receive the keys to your new home! As you can see, though, the ‘clear to close’ status doesn’t mean you will get the keys in your hand. You still have a few hurdles to jump to make sure you get the VA loan closed and the home in your possession as you planned.
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