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Mortgage Closing Process

Reviewed by: David Naimey

Approved by: Chad Turner

When your loan processor submits all of the documents required by the conditional approval and your file passes through all of the last checks with the underwriters, you will be ready for closing. This stage is usually called “Clear to close.”

Clear to Close and Significance of Closing

The closing process is the last step to receiving the keys to your home. The Closing Process can also be called the “Settlement,” in which you and all parties of a loan transaction sign the necessary documents. Once all parties are able to sign the closing package, this signifies the end of the mortgage loan process and begins the tenure of your home ownership.

The loan transaction becoming final, the funds being distributed, and you becoming the home owner all happen around the same time, making you now required to pay back the mortgage loan you just took out. If you paid for the home in full, then the home is now yours, without any other additional conditions.

Variability in Closing Process Duration

The closing process usually can vary in how long it takes. This can depend on what state you live in, as well as how loan process was done. The closing process can take even a few weeks due to the necessity of having to send the appropriate documents to each entity required to sign and date the closing package. This can add time, versus the “standard” procedure of sitting around the “closing table,” in which all required persons are available to sign and date the closing package.

Importance of Understanding Financial Responsibilities

This is a very important step that you understand, as the borrower, the terms of the loan, what the payments required are going to be, and all of the other financial responsibilities that you may need to be aware of for closing.

Additional Step for USDA Loans

For USDA Loans, this process has one more step before closing. A borrower’s file is sent to Rural Development, which has its own government underwriters that make sure the loan fulfills all of USDA’s guidelines before issuing the clear to close. These underwriters may ask for an additional Bank Statement or an additional pay stub to insure assets and income information coincides with the previous information sent. For example, borrowers with 1099’s, the government underwriter will want to make 100% sure that the income stays around the same amount, and there aren’t any huge variations in either direction.

Conclusion and Home Ownership Celebration

After all parties have signed on the dotted line, the home is now yours! While this is one of the more strenuous processes people will ever have to go through, the result is well worth it: the ability to call that dream property you saw yours!

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