Clear to Close is one of the final steps in the home buying process! It’s a big milestone and an exciting time. At this point, your lender and attorney or title company are working together and are on the same page.
So, what does Clear to Close actually mean?
This means that all contingencies and conditions are met and you are moving forward with closing! Think of it as the second-to-last tile in a board game. You can see the finish line and there are just a few final steps until you have your keys in hand!
During the mortgage process, certain contingencies need to be met, such as an appraisal, underwriting, and verification for a number of items. The appraisal needs to come in at or above the sale price (and if it comes in below, that’s ok – there are strategies your Realtor and lender will discuss with you if that happens); all of the documents you’ve submitted to your lender need to be cleared by the underwriter (these are things such as W2s or 1099 forms, employment verification, homeowners insurance); and verification that you have the funds to close, that the Closing Disclosures are approved and acknowledged at least 3 business days prior to the scheduled closing date, and that your loan application has been approved. Once everything is met, the lender will send the Clear to Close to your attorney or title company so they can get moving on their end.
What are the final steps after receiving Clear to Close?
The three big things needed from the time you receive the Clear to Close to when you actually close include:
- The final walk-through, which you’ll do with your Realtor
- Transferring additional money for your down payment and closing costs through a wire or check
- Signing the final documents with your attorney or title company
Here are three things that are happening behind-the-scenes at your title or attorney company:
- They are finalizing final numbers on the Closing Disclosure and determining how much cash you’ll need to close. You will receive these disclosures before your Clear to Close with rough numbers to get an idea of how much cash to bring to the table, but they may change slightly
- Documents are being drafted and finalized so they will be ready for you to sign
- Your attorney or title company representative will reach out and set a time and date for you to sign the paperwork and receive the keys
How long will it take from when we receive the Clear to Close to when we can actually close?
This varies with each buyer and transaction, but it can be anywhere from 1 day to 1 week. It varies depending on things such as when you sign the final documents, if there are any errors on the documents and need to be postponed, when the closing costs and rest of the down payment are transferred and received, if anything happens to the house in the meantime like flooding or other damage, if any of these dates fall on a holiday (aka a non-business day), and the time length of the process (such as a 15 day close vs 60 day close).
Clear to close means, basically, you’re in the clear! This is a huge milestone and there are just a couple of things to finalize and sign between you and your new home!