eClosings simplify home mortgages for homebuyers. They improve the home-buying process and make it more convenient for homebuyers.
eClosings simplify home mortgages for homebuyers in several ways. Electronic closings (e-closings) improve the home-buying process and make it more convenient for homebuyers.
Electronic mortgage closings have become increasingly popular among homebuyers and mortgage lenders, and for good reason.
There’s a lot homebuyers can do online these days. Search house listings, book property showings and apply for a mortgage. And, increasingly, they’re able to complete their home loan closings digitally as well, thanks to the eClosing option.
They were catching on even prior to the coronavirus pandemic, but the need for social distancing accelerated mortgage eClosing adoption. Although not all lenders offer electronic closings on mortgages, you can expect this option to become more and more common.
What is a mortgage eClosing?
The closing (also called “settlement”) of your home purchase involves the reviewing and signing of many legal documents, including your mortgage promissory note.
These documents must be signed before the property title can transfer from the seller to you, the buyer. Traditionally, a real estate closing involves the gathering of several people, including you, your real estate agent, the title company and your attorney if you have one, at a chosen location, such as the title company office.
Today, this process can be completed partially or fully remotely via an eClosing, in which you sign the necessary documents electronically using a secure online portal, likely from the comforts of your home.
“Electronic mortgage closings became prevalent in the residential real estate industry during the beginning stages of the pandemic, when the majority of offices were shut down by government order but people still had to close on their homes,” says Shaun Pappas, a real estate attorney and partner with Starr Associates in New York City.
eClosings for mortgages offer a measure of safety for buyers concerned about COVID-19 infections, but they also provide convenience. If you can complete the process online, from the comfort of your home, you may need to take less time off work to travel to the settlement office.
Additionally, there may not be a need to make arrangements to care for kids, pets, or elderly relatives at home that might need support. Electronic mortgage closings provide a certain measure of flexibility that modern borrowers may value.
How does a mortgage eClosing work?
That depends on the type of e-closing you have:
- Hybrid eClosing: This is the most common type of electronic mortgage closing. With a hybrid e-closing, you will sign some documents electronically and remotely. However, others will be signed in person with your lender or a notary public present.
- In-person eNotarization (IPEN): With this option, you meet face-to-face with a notary public who oversees the closing, but you sign all of the closing documents electronically.
- Remote online notarization (RON): The entire closing is done remotely. All documents are signed and notarized electronically meeting your notary online in a secure manner using audio/video technology.
In any of these scenarios, your settlement agent may ask you to use platforms or technology to digitally sign key documents. This will be done securely using two factor authentication to verify your identity.
One reason for the variations in eClosings with a home purchase is that the RON option is not legal everywhere. Depending on the laws in your area, some documents may need a wet ink signature (signed with a pen on paper in front of a notary public).
For instance: “In New York, an electronic closing is a real estate closing whereby the purchaser and seller do not attend the closing but all documents are pre-signed and delivered to the title company, along with all closing funds, and held in escrow until everyone agrees that the closing is complete and the funds can be disbursed,” says Pappas.
The pros and cons of mortgage eClosing
The more digital the mortgage process is, the easier it is for homebuyers – right? In many ways, that’s true, and e-closings are a great example of that. But like anything, eClosings can have some drawbacks, too. Let’s look at the pros and cons.
Benefits of mortgage eClosings
The eClosing process offers many benefits over traditional closings:
- More efficient
- More convenient than in-person closings
- If it’s a RON closing, can even close if you’re out of state
- Reduced risk of errors
- Reduced paperwork and potential waste
Cons of mortgage eClosings
- May be frustrating or difficult for homebuyers who are not tech savvy
- May require technology such as a webcam or access to an eSignature software or service
- Will need to be in an area with reliable internet service
- Less face-to-face time for last minute questions or reassurance if you prefer in-person meetings
- Not available in all states
What is an eClosing?
An eClosing is a home loan closing that is done completely or partially electronically. It involves signing the necessary documents digitally using a secure online portal on a computer or tablet. It may also involve utilizing special digital signing software and a videoconferencing platform, such as Zoom. Some documents may require a wet signature on paper done in person in front of a notary public, depending on the type of eClosing you’re doing.
Is closing done electronically?
In an eClosing, much of the process is completed electronically. However, parts of the closing process may be done in person, depending on the structure of your eClosing. In a hybrid eClosing, you’ll e-sign some documents, while others must be completed in person. With a remote online notarization (RON), you will sign all of your documents digitally.
Can a house closing be done remotely?
Yes, many home closings can be completed remotely and electronically if your state allows e-closings. Some eClosings require signing documents in person before a notary public.
The bottom line on mortgage-closings
Eager to take advantage of a eClosing on your mortgage, which may save you time and hassle? It’s important to find out what’s involved with the process, the extent to which a remote closing is allowed in your state, and which documents will need to be signed digitally versus manually.
Inquire with your real estate agent, lender, and/or attorney about these matters, and be sure to ask questions about anything you don’t understand.
“Request to see all your closing documents well in advance of the closing,” Pappas says. “Typically, all closing documents are sent to you for review before your closing. Review your closing statement carefully to confirm that all numbers and payees are correct. Your closing documents and loan documents should also be reviewed by an attorney well in advance of being circulated to you for signing.”
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