The final mortgage loan approval is forthcoming and we’re in the home stretch of the mortgage loan process. {Insert high-pitched excitement squeal here}. The initial underwriting approval has been issued the conditions have been submitted the Underwriter.
Please review this page carefully because it’s a mammoth page and it’s loaded with important details that are imperative for closing.
Closing Day Overview
The Underwriter issues the Clear To Close (CTC) once all the conditions meet the guidelines. The Closing Department then sends the title company the “loan instructions” so they can prepare the final Closing Disclosure (CD). The final Closing Disclosure (CD) will provide the exact amount of money due at closing. The Final CD is typically available a day or two before closing. The title company will send the CD to us and our Processor then forwards it to you.Mortgage Loan Process Outline
Click here for an overview on each step.
- Loan Packaging & Lender’s Disclosures (1-2 days)
- Loan Setup (2-3 days)
- Processing / Credit Approval (2-3 days)
- Initial Underwriting Approval (2-3 days)
- Sign the Initial Closing Disclosure (CD) (Immediate)
- Final Underwriting Approval (1-2 days) <– YOU ARE HERE
- Docs to Title / Final CD Issued (1-2 days)
- Closing & Funding (TBD)
- After Closing
What to Expect at Closing
Closings typically take one hour. The first 45 minutes will be you signing your life away. The last 15 minutes are for title to make copies of everything you sign.
Some title companies will offer you a paperless medium for your copies: such as a CD, flash drive, email, etc.. The closing loan package contains between 80 to 120 pages of documents depending on the loan program. Please allow an additional 30-50 pages if a Second Lien is included.
The closing docs will need to be signed with a blue pen (so leave that lucky black pen at home). The signatures will need to match the loan documents exactly. Example: if Joe Smith has a legal name of Joseph Bartholomew Smith Jr. then he will be required to sign that full name even if his normal signature is Joe Smith. Good luck Joe.
Note for refinances: For refinance home loans, the names on the closing documents will be what’s shown on the vested deed. If you have changed your name since title was vested, please let us know immediately so we can address this with our doc prep attorneys.
Must Be Present at Mortgage Closing
Everyone on the loan (AND possibly spouses) need to be at closing. If you securing a mortgage on your primary residence in the state of Texas (or any other Community Property State) then your spouse will need to be present at closing to sign documents, regardless of whether they are on the loan or not. Because Texas is a community property state a non-purchasing spouse is required to sign certain documents since they have an inherent vested interested in the property. As an FYI, Texas does not recognize legal separation: you’re either married or you’re unmarried.
NOTE: if you’re buying a primary homestead property and you’re legally married then your spouse will also need to attend and sign a few closing documents – even if they are not part of the loan.
Remote Closings
Please let us know ASAP if anyone won’t be available to sign the closing documents at the title company the day of closing. This includes the Seller. We can plan for either a “mail out” closing, a mobile notary, or a Power of Attorney (see “POA” below).
A mail out requires that the title company send the closing package to the absent party a few days before funding. The absent party can sign the documents (in front of a notary) and return them to the title company by the funding date. A Mobile Notary can also be arranged if the absent party is local but unable (or unwilling) to go to the title office. Mobile Notaries aren’t always free and can charge a fee of $100 to $150. You’ll have to ask the title company if they charge a fee for this service.
Closing Location
We don’t know where you will be closing. You’ll need to ask the Title Company. Your Realtor may be scheduling the details for closing for you. You’re welcome to reach out to the title company directly to ensure the time and location of closing fits your schedule. You don’t necessarily have to close at the title office listed on the contract. Often times you can close at a “sister” title company OR at a place of your choosing (like your office or home). A mobile notary fee may be charged if you choose to close remotely. Be sure to ask the title company for details. Once scheduled, please let us know the details of closing so we can plan accordingly.
What Time Should We Close?
We highly recommend closing between 10:00 a.m. and 12:00 p.m. if possible. The late morning closing allows enough time for any last minute questions, a walk-through on the home, time to run to the bank, and time for any last minute cosmetic changes to the CD that may arise from your review. This also allows enough time in the day for the Title Company to request Funding from the lender.
When Is It Official?
The transaction is officially complete when the title company notified everyone (including us) that the loan has funded. Our Funding page will provide more information on the timing and details of funding the loan. For purchases, funding typically occurs an hour or two after all parties have signed. For refinances, the home loan funds after a three-day recession period unless it’s a second home or investment property, then it funds the same day as closing.
Lenders Update Credit Before Closing
Many mortgage lenders will update your credit report a few days before closing. (Notice we said “update” and not “repull”. It doesn’t count has a hard inquiry on your report). Within a few days of closing a lender may update your credit inquiries to see if your credit has been pulled during the home loan process and will ask you for an explanation (and potentially for documentation) for these inquiries and if any new credit that was opened during that time.
Lenders will update your credit which means the credit balances and monthly payment amounts will be brought current AND any recent credit inquiries and Credit Disputes will be listed. For this reason we strongly recommend that you DO NOT attempt to get new credit during the home buying process. If you want a smooth and on-time closing then please help us help you and check out the Do’s and Don’ts When Getting A Mortgage.
Updated Balances
Once the credit is updated the Underwriter will verify that the debt to income (DTI) ratios are still in line with guidelines and that you qualify with the new balances and monthly payments. IF you don’t qualify then everyone has a real problem as closing is around the corner. So don’t go buying new furniture for a house that you don’t yet own.
Inquiry Letter Needed
The updated report will show any new credit inquiries since the credit report was pulled. It doesn’t matter if the inquiry was for a new credit card, a new car, a new business loan, etc. – it will be reported.
IF there are any new entries on the report the borrower must provide a “Credit Inquiries Letter” explaining each inquiry and provide an affidavit on whether any credit was opened. If any credit was opened (even with a zero balance) the borrower must provide documentation outlining the details. These additional actions will most likely delay closing because the file will need to be resubmitted to underwriting for review.
Again, we strongly recommend that you do not pull your credit during the mortgage process and live life “normal” until after closing.
What to Bring to Closing
- Driver’s License(s) – or some form of government ID
- POA Docs (if applicable)
- Funds for Closing – typically a cashier’s check or money wire
Driver’s License
You will need to bring your driver’s license (or some form of government-issued ID such as a passport, identification card, etc.). If you’re not a U.S. Citizen then you will need to bring your Visa and/or Green Card as well. They will want two forms of ID.
POA Original Documents
If someone is going to sign on behalf of an absent party then please check out our Power of Attorney section for details that they’ll need to know. The absent party must be available via phone at the time of closing to provide identification and consent that they still want to proceed with the transaction. The person doing the signing will need to bring the original Power of Attorney to closing (or provide it to the title company in advance).
Funds for Closing
See below for Acceptable Funds for Closing.
Acceptable Funds For Closing
The funds for closing will need to come from sources that were provided to the lender AND must come from an account belonging to the person on the loan (or from the donor’s account if there are Gift Funds). Please also note that we are unable to initiate any transfer on your behalf. You must take the necessary actions to provide the funds to title.
Cashier’s Check
This is the most common method of providing funds for closing. Go to your bank and get a cashier’s check (a.k.a. a certified funds check) and have it made payable to the title company for the amount due.
Wire Transfer
You can wire money from your financial institution directly to the title company. You will need to contact the title company directly for their wiring instructions and contact your bank for details on how to wire the funds. Please make sure you initiate the wire transfer with enough time for the funds to be received by the title company before the funding date. We recommend initiating the wire three days before funding to be safe.
Personal Check
We do NOT recommend personal checks. Texas title companies won’t typically accept personal checks unless the amount is under $1,500. HOWEVER that $1,500 is not a standard amount and some title companies may have lower limits. Please be sure to confirm this limit with the title company before the closing date to ensure a smooth closing. OR get a cashier’s check and know you’re good.
Proceeds From Sale
If you are selling a home and want to use the proceeds from the sale, the title company that was a part of the sale transaction can wire the proceeds directly to the title company that is a part of the purchase transaction. If the sale and purchase are done at the same title company then typically no action is required.
Cash Back
If you expect to receive cash back from the closing then please bring a voided check so the title company can wire those funds directly upon funding. You can also provide title with wiring instructions from your financial institution if you want the funds wired to your account. If you forgot to bring a voided check or the wiring instructions, the title company will send you a check in the amount you’re owed.
Briefcase of Cash… Kidding. Cash is NOT an option.
Cash is not an acceptable source of funds for closing. We’re just making sure you’re paying attention.
Voided Check for Refund of Excess Funds
Occasionally a borrower will bring an amount in excess of what’s required at closing. This typically occurs when a previous home is sold and the proceeds are used for the new loan and/or when money is sent in advance of the Closing Disclosure being prepared. In the event that excess funds are sent to title, the title company will refund the difference after closing. We recommend bringing a voided check to closing so the title company can wire the funds directly back to your account. You could also provide the title company with wiring instructions for your financial institution to receive the excess funds. The title company can provide you with check if you do not provide a voided check or wiring instructions.
What’s Next
Once the final underwriting approval is issued the file will be assigned to a Closer. The lender’s Closer will work with the attorneys to prepare closing instruction and send docs to title.
Mark Pfeiffer
Branch Manager
Loan Officer, NMLS # 729612
972.829.8639
MortgageMark@MortgageMark.com
We assist clients with all type of mortgage loan programs