After a mortgage offer is issued, you generally have 30 to 60 days before you sit down at the closing table. During that stretch you’ll clear any remaining conditions attached to the commitment letter, the title company will vet the property, the lender will send you a Closing Disclosure that you have three business days to review, and you’ll do a final walkthrough before signing. The loan doesn’t fund until every one of those pieces is in place.
Clearing the Conditions in Your Commitment Letter
The commitment letter spells out your loan amount, interest rate, repayment term, and the conditions you still need to satisfy before the lender releases funds. Repayment terms are most commonly 15 or 30 years, though other lengths are available depending on the lender and loan product.1Consumer Financial Protection Bureau. Understand the Different Kinds of Loans Available Conditions often include paying off a specific debt, providing extra documentation, or obtaining homeowners insurance.
Homeowners insurance is required because the property is collateral for the loan, and the policy generally must cover at least the full replacement cost of the structure.2Consumer Financial Protection Bureau. What Is Homeowners Insurance? Why Is Homeowners Insurance Required? Get the insurance binder to your lender quickly. The commitment letter has a validity window, and missing it can cause the offer to expire.
Compare the commitment letter against the Loan Estimate you received earlier. The origination charges should line up with what the lender initially disclosed.3Consumer Financial Protection Bureau. Loan Estimate Explainer Anything that doesn’t match is worth raising with your loan officer before you sign.
Watch the Rate Lock Clock
Your commitment letter locks the interest rate for a set period, typically 30 to 60 days. If closing slips past that window, you’ll need to request a rate-lock extension. Extensions usually carry a fee, either a flat amount or a percentage of the loan balance. Many lenders waive the fee when the delay is on their end but charge it when the delay is on yours. Ask about the extension policy early so nothing surprises you.
The Closing Disclosure and Your Three-Day Review
Before closing, the lender must send you a Closing Disclosure. It’s a five-page document showing the final loan terms, projected monthly payment, interest rate, and a full breakdown of every closing cost.4Consumer Financial Protection Bureau. What Is a Closing Disclosure? Federal law requires you to receive it at least three business days before closing.5Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs
Use those days to read the Closing Disclosure against your original Loan Estimate line by line. The interest rate, loan amount, and estimated monthly payment should match or come very close.6Consumer Financial Protection Bureau. Closing Disclosure Explainer Look closely at origination charges, title fees, and prepaid items like property taxes and insurance. Problems are far easier to fix now than at the closing table.
Only three kinds of changes force the lender to issue a corrected disclosure and restart the three-business-day clock:7Consumer Financial Protection Bureau. Know Before You Owe – You’ll Get 3 Days to Review Your Mortgage Closing Documents
- The APR rises by more than one-eighth of a percentage point on a fixed-rate loan or one-quarter of a point on an adjustable-rate loan.
- The loan product itself changes, such as moving from a fixed rate to an adjustable rate.
- A prepayment penalty is added that wasn’t previously disclosed.
Other corrections can be made up to the day of closing without a new waiting period.5Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs
Don’t Do Anything That Puts Your Approval at Risk
The lender keeps watching your finances right up to funding. Avoid switching jobs, taking on new debt, co-signing for someone else, making large purchases on credit, or moving big sums between accounts. Any of those can jeopardize the approval even after the commitment letter has been issued.
Lenders verify employment for every borrower whose income was used to qualify.8Fannie Mae. Standards for Employment Documentation Shortly before closing, they perform a verbal verification of employment, which is a phone call to your employer. For borrowers using employment income, this check must happen within 10 business days before the note date.9Fannie Mae. Verbal Verification of Employment If you’ve changed employers, dropped hours, or taken on significant new debt, the lender may revoke the commitment or require you to requalify.
Title, Flood, and Property Due Diligence
While you finish your paperwork, a title company or attorney reviews the property’s legal history. The title search traces the chain of ownership and turns up any unresolved liens, easements, or boundary disputes. Unpaid property taxes from a previous owner or a contractor’s claim against the property have to be cleared before closing can move forward.
The title professional also confirms that the legal description matches public records. A clean title report is required before the lender releases funds. Title insurance, a one-time premium paid at closing, protects you and the lender if an ownership defect surfaces later that the search missed.
Flood Zone Determination
The lender orders a flood zone determination on the property. If the home sits in a special flood hazard area, meaning land with at least a 1% chance of flooding in any given year, federal law requires you to carry flood insurance for the life of the loan. The coverage must equal at least the lesser of your outstanding balance or the maximum coverage available under the National Flood Insurance Program. Narrow exceptions apply to loans of $5,000 or less with a term of a year or shorter and to detached non-residential structures on residential property.10eCFR. Subpart S – Flood Insurance Requirements
Guard Against Wire Fraud
The days before closing are a prime window for wire fraud. Scammers monitor real estate transactions and send emails that mimic your agent or closing attorney, giving fake wire instructions that redirect your down payment. The Consumer Financial Protection Bureau recommends the following:11Consumer Financial Protection Bureau. Mortgage Closing Scams – How to Protect Yourself and Your Closing Funds
- Establish trusted contacts early. Discuss the wire process with your agent and settlement agent in person or by phone before closing, and consider a code phrase known only to those parties.
- Verify every wire instruction by phone using a number you previously confirmed. Never use a number from an email.
- Treat any emailed wire instruction as unverified. Scammers replicate email addresses, phone numbers, and formatting nearly perfectly.
- Don’t email account numbers, routing numbers, or other financial data. Email isn’t a secure channel.
The Final Walkthrough
Ideally within 24 hours of closing, you’ll walk through the property one last time. The purpose is to confirm the home is in the condition the seller promised, verify agreed-upon repairs were completed, and check for any new damage. The walkthrough isn’t a home inspection; it’s a check that nothing has changed.
Move through every room. Run faucets, flip switches, open and close doors, and confirm that appliances included in the sale are present and working. If something significant is wrong, you can negotiate with the seller or delay closing until it’s resolved. Once you’ve signed, holding the seller responsible gets much harder.
Closing Day
At closing, you’ll sign the mortgage note (your promise to repay), the deed of trust or mortgage (which gives the lender a lien on the property), and a stack of related documents. You’ll pay your down payment and remaining closing costs, generally by wire transfer or cashier’s check. Common closing cost categories include origination charges, title insurance, appraisal fees, government recording charges, and prepaid property taxes and insurance premiums.6Consumer Financial Protection Bureau. Closing Disclosure Explainer
In most states, the lender wires funds to the closing agent the same day you sign. The closing agent combines your money with the lender’s and sends the full purchase price to the seller’s side. Once the seller confirms receipt, you get the keys. Some states use “dry” closings, where you sign first and the lender disburses funds a few business days later after a final review. In those states, keys typically don’t change hands the day of signing.
What Happens After You Close
Recording and Escrow
The closing agent files the deed and mortgage with the county recorder’s office, formally establishing your ownership and registering the lender’s lien. Any previous mortgages are recorded as satisfied. Recording fees vary by county and generally depend on document length.
Most lenders set up an escrow account to collect monthly amounts for property taxes and homeowners insurance alongside your mortgage payment. Federal law caps the cushion a lender can require you to keep in escrow at no more than one-sixth of the estimated annual disbursements, roughly two months of payments.12eCFR. 12 CFR 1024.17 – Escrow Accounts If your servicer collects more than that, you may be entitled to a refund.
Form 1098 and Your Records
After the end of each calendar year, your lender reports the mortgage interest and any points you paid on IRS Form 1098. If your total mortgage interest, including points, reaches $600 or more during the year, the lender must send you this statement for your federal tax return.13Internal Revenue Service. Instructions for Form 1098 – Mortgage Interest Statement Points paid in connection with buying your primary residence are reported separately. Keep your Closing Disclosure and settlement documents; interest and points paid may be deductible on your federal return.