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 nod of 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 met completely: 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 to go to signatures.

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

Buyers should not make life or credit changes after their loan is CTC, because changes nullify mortgage approvals and the clear-to-close status can be revoked.

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 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 their closing, they must maintain their financial stability and avoid any actions that could change their creditworthiness, such as making large purchases on credit or changing jobs or marital status.

Getting a clear-to-close means the buyer can schedule their final walk-through of the property, review their documents for closing, and wire their money safely 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 the details of your purchase 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 getting a 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?

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

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

After getting a clear-to-close, avoid actions that would change your financial profile or creditworthiness, including taking on new debts, making big 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.