Getting approved for a mortgage loan can require a lot of time and patience, but once you've completed all the lender's requirements, the lender will let you know that you're clear to close and finalize the loan process.
Here's more on what it means when you're clear to close and what to expect about the rest of the mortgage process.
What Does "Clear to Close" Mean?
Clear to close (CTC) is a stage late in the mortgage process that indicates you've completed all the requirements to get approved for your mortgage loan. At this point, you can schedule the closing meeting with the title company and officially buy your new house.
Before you can get this green light to close on your mortgage loan, you'll typically need to complete the following steps:
- Get mortgage preapproval. Submit an application to at least three mortgage lenders so you can compare loan amounts, interest rates, closing costs and other terms. Note that preapproval terms aren't guaranteed.
- Make an offer on a home. Once you have a preapproval in hand, find the home you want to purchase and make an offer. If the seller accepts your offer, you'll sign a legally binding contract.
- Apply for the loan. Reach back out to your lender and submit an application. At this point, you'll need to provide various documents to verify your identity and financial situation.
- Meet the contingencies. Your purchase contract will likely have certain contingencies you need to meet, such as a home inspection and a title search. You may also include a contingency that you must first sell your existing home before the deal can go through.
- Wait for approval. Once you've completed everything on your end, your lender will finalize other aspects of the underwriting process and notify you and the title company that you're clear to close.
Learn more >> How Long Does Mortgage Underwriting Take?
What Happens After You're Clear to Close?
Once the lender has finalized the underwriting process, there are a few more steps before you complete the settlement and become a homeowner.
Get Your Closing Disclosure
A closing disclosure is a document that outlines the final details of the mortgage loan, including the interest rate, closing costs, projected monthly payments and more.
Lenders are required to provide a closing disclosure at least three business days before the closing date so that you can compare the terms to your loan estimate, which you received after applying for the loan.
Do a Final Walk-Through
A final walk-through allows you to go through the home one more time to make sure it's in the condition you expect. If you negotiated for the seller to make certain repairs, this is the time to verify that they've been completed to your satisfaction.
If you find any problems that haven't been resolved, be sure to address them with the seller before closing. In some cases, they may offer to put money toward your closing costs instead of completing the repairs.
Attend Closing
Once you're clear to close, the title company or attorney you're using will reach out to schedule a date and time for the settlement meeting and also how to handle payment for closing costs.
You'll typically need to bring two forms of identification, proof of homeowners insurance and a copy of the purchase contract. If the title company or attorney prefers closing cost payment via cashier's check, you'll also need to bring that. Otherwise, you may receive wire transfer instructions before closing, and you can bring the confirmation.
Once you're finished providing the necessary documentation, the title representative will go through the closing documents with you and have you sign them to complete the process. If you complete the closing process at the same time as the seller, you may receive the keys immediately. Otherwise, you may need to wait until the seller completes their closing paperwork.
Frequently Asked Questions
It takes a minimum of three business days after you're cleared to close to complete the settlement process because lenders must provide the closing disclosure within that time frame. However, your closing time may also be affected by your schedule and ability to meet at the title company or attorney's office.
For the most part, you won't be denied after you've received the green light to close on your mortgage loan. However, the lender still reserves the right to do so if there are dramatic changes to your financial situation.
For example, if you lose your job, change jobs or take out a large loan or line of credit that could impact your ability to make mortgage payments, the lender may pull its approval at the last minute. As a result, it's crucial that you avoid applying for credit until you've completed the settlement process.
Also, while it may be tempting to conceal a drastic change in your income to avoid denial, not doing so could constitute mortgage fraud. In other words, honesty is the best policy.
Learn more >> What to Do if Your Mortgage Application Is Denied
Monitor Your Credit Throughout the Mortgage Process
In addition to getting your credit ready for a mortgage loan, it's important to continue monitoring your credit score throughout the mortgage process to avoid surprises.
With Experian's free credit monitoring service, you'll get access to your FICO® Score☉ and Experian credit report, which you can use to track your credit health and gain insights into new developments that could threaten your standing.
As you work to safeguard your credit and respond to your lender's requests promptly, you'll have an easier time sailing through the mortgage process to your closing date.