What Is A Mortgage Clear To Close?

A mortgage clear to close is when the mortgage lender has signed off on the mortgage loan and is ready to send the mortgage documents out to the title company and fund the mortgage loan so you can close on your home. The Clear To Close is also referred to as CTC.  There are tips to fast mortgage clear to close that we will cover on this article.  The mortgage process starts with the mortgage loan applicant applying for a mortgage loan, the mortgage loan officer running credit and pre-approving the mortgage loan borrower.  The mortgage loan officer then collects all necessary documents from the mortgage loan borrower such as two years tax returns, two years W2s, most recent paycheck stubs, sixty days bank statements, asset documents such as IRA accounts, 401k account, social security awards letter, pension award letters, bankruptcy paperwork if applicable, foreclosure paperwork if applicable, divorce paperwork if applicable, short sale paperwork if applicable, and any other documents pertaining to the mortgage loan applicant’s income, liabilities, and assets.  Tips to fast mortgage clear to close is submitting all the necessary paperwork the right way the first time around.

Sloppy Mortgage Application Package Will Delay The Mortgage Clear To Close

The most common reason why there are delays in mortgage clear to close is due to the mortgage loan application package being submitted incomplete.  Good processing of the paperwork prior to submission to the underwriter is key.  Example of sloppy mortgage document submission is if you had a bankruptcy, the mortgage loan processor is not submitting all of the paperwork of the bankruptcy and just the discharge papers. Mortgage underwriters require all pages of the bankruptcy filings as well as the discharge paperwork.  Same goes with the divorce papers.  You need to submit all pages of the divorce decree and not partial.  Same with alimony, child support.  If you have social security income, you need to submit the social security awards letter.  If you have pension income, you need to submit the pension awards letter and not just a copy of your pension check.  If you have verification of rent, do not just submit your lease with your landlord but you need to provide 12 months canceled checks, or 12 months bank statements showing the funds of your rent leaving your bank account and transferring to your landlord’s bank account as well as a verification of rent processed by the loan processor or a letter from your property management company if you are renting from a professional property management company.

High Debt To Income Ratios

High debt to income ratios is one of the most common reasons for a mortgage loan denial.  If you have borderline debt to income ratio caps, make sure that your mortgage loan officer gives you a Plan B.  Plan B’s can be having a non-occupant co-borrower on stand by or having to pay down or having to pay off all of your credit card balances or even having to put more money down as your down payment to reduce your mortgage loan monthly payments.  It can also be requesting a higher sellers concession from the seller to buy down your mortgage rates to reduce your monthly mortgage payments.  Changing the loan program from a fixed rate mortgage loan to an adjustable rate mortgage loan can also reduce your interest rates which in turn lower your monthly mortgage payments.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

4 Comments

  1. Bennie Chukwurah says:

    What is a safe place to be with dti?

    • Gustan Cho says:

      For conventional loans, the maximum debt to income ratios allowed to pass automated approved per Automated Underwriting System is 45% debt to income ratio. For FHA Loans here are the rules:
      1. If your credit scores are under 620 FICO, maximum debt to income ratios are capped at 43%.
      2. If your credit scores are 620 FICO or higher, your debt to income ratios is capped at 56.9%.

    • Gustan Cho says:

      Bennie,
      Also, USDA Loans cap debt to income ratios at 41% and jumbo mortgages caps on debt to income ratios are normally capped at 40%.

    • Gustan Cho says:

      Here is a mortgage blog article post that I have written and published on http://www.gustancho.com on Solutions To High Debt To Income Ratios that may help you

      http://gustancho.com/debt-to-income-ratio-4