Most home purchasers are overjoyed when their lender tells them they are ready to close after going through the several steps of the mortgage application process - and for good cause. With underwriting, document verification, and the offer completed, being clear to close - also known as "CTC" - in real estate is a solid indication that your lender will provide you with the financing you require. 

All of this is to say that just because you're clear to close doesn't imply you've arrived. Before you receive the keys to the property, you must fulfill a few final tasks.

What Is the Meaning of 'Clear To Close'?

"Clear To Close" simply implies that you've met all of the requirements and conditions for your mortgage to be closed. At this point, your lender has thoroughly examined your documentation and determined that you meet the requirements for the type and amount of mortgage you're seeking.

Lenders will normally begin planning for the closing day after a borrower has been permitted to close. Your loan officer will set a date and time for your closing meeting and will notify your title company, real estate attorney, and any other attendees. Your lender will also prepare any final documents that you will be required to sign on the day of your closing.

How To Clear Your Loan For Closing

Clear to close necessitates a significant amount of effort on the part of both the lender and the borrower. Missing even one step could mean the difference between a fully cleared loan and an application that is declined. 

To get your mortgage cleared for the closing date, you must first complete the following steps: 

• Provide Documentation. Before they can fully accept your application, your mortgage provider will need to review several documents. First, your lender will want to see proof of your income and assets, such as pay stubs and current bank statements. Then you'll need to submit your current debt and monthly expenses, which will help your lender estimate your debt-to-income ratio. Finally, you may be required to provide your lender with written permission to view your credit score. 
• Make A Bid. Before you can close on a home, the seller must accept your offer. The most successful buyers understand that making an offer necessitates a sound strategy. Many factors influence the ultimate price you pay, so think about how long the house has been on the market, how many repairs you'll need to do, and how many other buyers are interested in it. 
• Have The House Evaluated And Inspected. Even though they serve different goals, appraisals and house inspections are both important phases in the home-buying process. During your assessment, a third-party licensed appraiser will evaluate the property's fair market value, assuring both you and your lender that the price you'll pay for the home is accurate. Home inspections, on the other hand, assist buyers in identifying flaws with a home before purchasing it. 
• Obtain Approval From Underwriters. The underwriting procedure assists lenders in approving your loan. Underwriters will examine not just the paperwork you've submitted, but also the data around your income, credit history, DTI, assets, and the amount and type of loan you've requested. 

Working through each step contributes to the 30-45-day average time between underwriting and closure. If you want to reach CTC status as soon as possible, make sure you prepare your documentation ahead of time, complete your mortgage application, meet all of your underwriting requirements, and maintain an open line of communication with your lender. 

What Happens When You're All Set To Close? 

Once your lender has informed you that you are ready to close, you will have completed the majority of the mortgage procedure. However, there are a few crucial steps between you and the property.

Closing Disclosure

Your loan officer will give you a Closing Disclosure once you've passed underwriting and conditional approvals. This five-page document covers the terms and conditions of your mortgage agreement, offering a detailed breakdown of all the costs and fees you'll be responsible for when you sign.

Understanding your Closing Disclosure is one of the most crucial phases in the home-buying process because you are responsible for any charges listed. Check that you are not signing a document that has errors or terms that will interfere with your payback plan. 

Final Walkthrough 

Even if you buy the house as-is, a final walkthrough after receiving the Closing Disclosure is your opportunity to check the property is in the condition you and the seller agreed upon. Although walkthroughs aren't officially required once you're cleared to close, neglecting a last check could be a costly error. 

In most circumstances, the house should be ready to move into by the time you do the final walkthrough. However, if anything is amiss with the house, this is your final chance to fix it before it becomes your responsibility.

These are just some of the basic things you need to know about Clear To Close. In the next part, we’ll dive deeper into what happens after the Closing Day, frequently asked questions about Closing Disclosure, and more.