Clear to close means the lender inspected and verified your eligibility and documentation for your mortgage, determined you’ve met the requirements, and approved your mortgage application. This means the lender, (and the title company, real estate agents and other parties to the transaction) can start preparing for closing day.
If you’re buying a house, the three magic words you want to hear are “clear to close.” This means you’ve met the lender’s requirements and conditions for your mortgage and are in the final stretch of buying your new home.
Waiting to be clear to close can be especially aggravating if closing is pushed back to a date that’s yet to be determined.
How Long Does it Take to Close After You’ve Been Cleared?
The average time to close is 55 days, according to Ellie Mae, a leading mortgage software company.
During this time, you’ll need to take care of a few legal documents and disclosures. But lender delays are not unheard of, so your timeline could vary.
Once the lender gives the okay, your sale is likely to go through. But it’s possible the lender could deny your application. Denials are usually because of significant financial changes that happen before closing, like leaving your job or taking out another loan.
🗓️ What is the clear to close three-day rule?
The three-day rule refers to disclosures about the property that are legally required. It states disclosures must be delivered three days before closing.
Common Lender Delays When Waiting on Clear to Close
Even if you are prepared as a home buyer, you can still face delays beyond your control. Being aware of the possibilities and having a back-up plan can help you wait it out.
Sellers may forget or neglect repairs they agreed to before closing. The home inspection helps you identify these needed repairs before finalizing the purchase.
An experienced real estate agent can follow up with the seller or their agent to make sure those repairs get done. They can also help negotiate a lower sales price if the buyer doesn’t want to make those repairs.
Your lender may require your employer to provide income verification. If it isn’t done promptly, the lender can delay your closing.
Hiring contractors like home inspectors, appraisers and surveyors can also delay your closing if they are busy and can’t get you in right away or are no-shows for an appointment.
Waiting for others to do their job so you can move forward with buying your new home can be frustrating. If you stay attentive and communicate frequently with third parties to confirm deadlines and appointments, you can help them stay on track, so you close on schedule.
You need the title transferred from the seller to complete your purchase, but sometimes title mishaps cause delays.Though rare, titles may have public record errors, unknown liens, or survey conflicts. Be patient, flexible, and rely on your real estate team to get these title hiccups resolved.
Funding problems can create significant delays. For example, your lender may ask you to:
- Send over a paper trail showing where the $5,215 deposited into your checking account on July 2 came from.
- Get a letter from your uncle stating that the $5,000 he gifted you last year came with no expectation of repayment.
- Provide additional tax returns for last year (or the year before).
While these types of lender delays can be frustrating, you can resolve them by staying organized and communicating as clearly as possible, preferably in writing.
Here are a few rare (but possible!) delays that can halt your home-buying process:
- Death in the family
- Inclement weather closing banks and government offices
- Insurers withdrawing coverage in newly identified flood zones
- Job loss
- Lender requiring re-appraisal after a storm
- Natural disasters like a tornado or flood damaging the house
- Sudden injury or illness of a buyer or family member
These situations may delay things by several days or weeks, or sometimes even end the process altogether.
Typical Clear to Close Timeline
The seller, buyer and lender have many tasks to complete in the clear-to-close timeline. Avoid skipping steps, like home inspections, because it could leave you unaware of problems that could cause you setbacks down the road.
Also, disclose potential red flags early so when the underwriters get to it, you’ll be prepared with answers to their questions and avoid delays.
Make an Offer (2 to 3 days)
When you make an offer on the home, you may have to wait a few days for the agent or seller to respond. The current owner’s response could take longer if you make the offer on a weekend or holiday.
Application (1 day)
Even if you were pre-approved for a mortgage, you must still complete an application. You can typically complete it within a day. Your lender will have paperwork for you to fill out, and they’ll pull your credit as part of the approval process.
Provide Documentation (Several days)
Your lender will probably request additional paperwork about your assets and income for the underwriter. During the underwriting process, the lender verifies the information on your application and compares it to the bank’s requirements for issuing a loan.
The documentation phase can take a few days to several weeks, depending on the complexity of your application.
Schedule Appraisal and Inspections (1 to 3 weeks)
Depending on how busy the providers are, it can take between one and three weeks to schedule and complete the appraisal and inspection of your new home.
Get Approved by Underwriting (3+ days)
You may get approved by underwriting in as little as two or three days, but it could take a few weeks. It depends on how much documentation the underwriter must process and if there are appraisal problems or missing information or signatures.
What Happens After You Get Cleared to Close?
Your mortgage process is nearly complete when your lender says you’re clear to close. But, you still need to walk through the three last steps.
The loan officer sends you a closing disclosure when you’ve completed underwriting and passed conditional approvals. The closing disclosure spells out the terms and conditions of your loan agreement and summarizes the fees and expenses you’ll pay.
Your Closing Disclosure provides you the opportunity for a final walkthrough of the property with your agent. This way, you can ensure the home is in the condition that you and the seller agreed to in the closing documents.
You don’t want to waive this step to get to closing more quickly — it could leave you paying for problems the seller agreed to address before closing.
Finally! The day you’ve been waiting for has arrived. On closing day, you’ll complete the transaction by paying the down payment and closing costs. Then, you sign the paperwork and update the house’s deed to become the property’s new legal owner.
5 Tips to Speed Up the Closing Process
Speed up your closing process by getting all your documentation and responding as quickly as possible to all communication.
- Get pre-approved. Before making an offer, get a pre-approval letter from your preferred lender. Sellers also want to close quickly, and a buyer offer with pre-approval has a better chance of being accepted.
- Maintain your credit rating. Your credit rating is a critical element that determines your interest rate and final approval. Don’t make large purchases on credit cards like furniture or appliances, take out any new loans or sign up for credit cards.
- No major life changes. If you expect major life changes like changing or quitting your job, imminent divorce, or bankruptcy, postpone buying a home until the dust settles.
- Only necessary information. Only provide information your lender requests. Giving more information than is necessary can slow down your approval process and raise red flags unintentionally.
- Respond quickly. When your lender contacts you by mail or phone, respond to their inquiry as quickly as you can.
Hearing that you’re clear to close means your closing date is fast approaching. However, getting there quickly requires an understanding of the clear to close process, including what happens after you’re cleared.
FAQs About Being Cleared to Close
What does clear to close mean?
Clear to close means you’ve met the lender’s requirements and conditions for your mortgage and are in the final stretch of buying your new home. Learn more about what clear to close means.
Does closing disclosure mean clear to close?
The loan officer sends you a closing disclosure when you’ve completed underwriting and passed conditional approvals and you’re clear to close. Learn more about closing disclosures.