What Is Clear-to-Close?

“Clear-to-close” or “cleared-to-close” is the final stage of mortgage underwriting, signifying that all prerequisites have been met and your mortgage lender has given the final approval for your loan.

A Longer Definition: Clear-to-Close

Clear-to-Close, or CTC, is one of the final stages in a first-time home buyer’s mortgage approval. When a buyer receives their clear-to-close, it means their mortgage application’s conditions for approval have been fully met: income and asset information are reviewed and approved; home appraisal and title reports are confirmed and valid; and purchase contracts are legitimate and signed.

A mortgage that is clear-to-close is ready for signatures.

Generally, a few days pass between receiving a clear-to-close on a mortgage and signing for the new house and keys. During this time, buyers can expect to schedule their closing date, review final mortgage documents, and wire the necessary funds for purchase.

Buyers should not make life or credit changes after their loan is clear-to-close, as these changes could nullify mortgage approval and result in the clear-to-close status being revoked.

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Clear-to-Close: A Real World Example

Imagine a first-time home buyer notified that their mortgage application for an FHA mortgage is clear-to-close. This milestone indicates that the lender has completed all necessary reviews and approvals, setting the stage for the final steps in acquiring a home.

The buyer enters a critical phase. Between today and the closing date, they must maintain their financial stability and avoid actions that could affect their creditworthiness, such as making large purchases on credit, changing jobs, or altering their marital status.

Getting a clear-to-close means the buyer can schedule a final walk-through of the property, review closing documents, and wire funds securely to the settlement.

Common Questions About Clear-to-Close

What should I do after getting my clear-to-close?

After receiving clear-to-close status, prepare for your closing by reviewing your closing documents, arranging the necessary funds, and confirming details with your real estate agent and mortgage lender.

How soon after clear-to-close can I expect to close on my home?

Typically, closings happen a few days after receiving clear-to-close status. This period allows for final preparations and scheduling of the closing meeting.

Is clear-to-close a guarantee that the home purchase will go through?

Receiving clear-to-close does not guarantee that your purchase will close successfully, but it is an important milestone. Significant financial changes or unusual activities could cause your mortgage to re-enter underwriting and affect your purchase transaction.

What should I avoid doing between clear-to-close and closing day?

After receiving a clear-to-close, avoid actions that would change your financial profile or creditworthiness, including taking on new debts, making large purchases like a car or expensive appliances, or applying for new credit cards. Also, avoid changing your employment status or job title. Any change in your profile can lead to a re-evaluation of your financial situation and jeopardize your closing.