The U.S. Mortgage Pre-Closing Process – A Complete Guide

Closing day has arrived. Your client is almost ready to become a homeowner. You want to make sure everything goes smoothly. It will help to go through a mortgage pre-closing audit.

This brings us to the question: what is pre-closing in mortgage?

As a lender, you must help buyers through a detailed pre-closing checklist. It will help ensure everything is in order for closing day. The checklists must include complete loan terms, appraisal documents and everything else required to successfully conclude the mortgage loan process.

We’ve curated this handy guide to understand what goes on during and after the U.S. mortgage pre-closing process. As lenders, it will help you have a complete overview of the pre-closing and closing process. Use this guide to ensure a seamless buyer experience.

What Is Pre-Closing in Mortgage?

The pre-closing checklist is a rehearsal for what is to come. Guide your client to purchase a homeowner’s insurance that commences only once they shift into the new home. The next step is to arrange a check for property down payment and other costs shared by the attorney.

The buyer probably made an earnest money deposit during home purchase— make sure that is not included in the check. Subsequently, ask your client to revisit the property and make sure everything is in order.

Once the mortgage pre-closing audit is complete, guide the buyer to move on to the closing process.

What is The Closing Process?

Once you’ve approved the loan and the buyer has revisited the house, the closing process can begin.

Closing or Settlement is the final step in mortgage loan application process. In this step, the buyer and their real estate agent meet the seller, their agent and an escrow agent. All of them review documents in detail.

It will help both you and the buyer to be aware of the documents that are reviewed in the settlement meeting. These include the Mortgage Note, the Deed of Trust and the Closing Disclosure.

The Deed of Trust essentially confirms that the buyer understands the loan terms and promises to fully repay the loan amount. It also reiterates your right as a lender to foreclose the loan if the buyer fails to repay the loan amount.

The Closing Disclosure specifies changes (if any) in the mortgage loan plan or interest rates since the start of the application. It also confirms the actual purchase cost compared to the estimated amount.

At this stage, the homebuyer will need to sign declarations confirming that he/she understands his/her obligations and rights as a homeowner. The closing disclosure is also signed.

After reviewing everything, the process of property transfer begins. This procedure may vary across different states. You can check laws to ensure compliance.

Finally, the keys are handed over to the buyer.

What’s Your Role as a Lender?

Support buyers by reviewing all the documents in detail on closing day. You can help a buyer successfully close the mortgage loan application by following a few key tips. Always address buyers’ doubts if a number on the agreement sounds inaccurate to them. Be open to fixing any wrong projections rather than offering an implausible explanation.

Even though the process is contingent to a buyer’s credit rating, you must cater to whatever is best for them. It is your responsibility to thoroughly explain the agreement to the buyer. Give buyers the space to reconsider their decision or walk out in case they are not comfortable at any point.

The U.S. mortgage pre-closing process is a vital part of loan processing. Hundreds of checks must be performed before successful loan closure.

You can transform your mortgage pre-closing process with HelioNext’s pre/post audit optimization solutions. Our team helps you identify, manage and communicate pre-closing audit risks across the loan setup process.

Our intelligent solutions are empowered by machine learning, eliminating the need to manually verify purchase offer, loan estimate, closing disclosure and many other mandatory documents. As a result, you can accelerate operations, increase efficiency, save time and maintain a healthy cashflow.