Even before the COVID-19 pandemic, it was possible to close on a home remotely. Documents requiring an original signature could be mailed or overnighted. Each party could meet with their own notary in a convenient location to collect signatures.
However, the pandemic has made remote closings more popular, and a number of states now allow remote online notarization — a fully remote home closing.
What happens at a closing
Closing, also known as settlement, is when you finalize your mortgage and officially become the owner of your new home.
At a typical closing, you, the seller, the real estate agents, and the settlement officer will gather and sign all of the necessary documents. Other parties, such as your mortgage lender or attorney, might also be present for the transaction.
With modern technology, closing often takes place partially or completely online, though, some states still don’t allow remote online notarization.
These are the key documents that must get signed at closing:
- Transfer deed
- Deed of trust or mortgage
- Lender’s promissory note
- Closing Disclosure
- Escrow disclosure
Before closing on a mortgage, be sure to estimate your monthly payment with a mortgage calculator.
Pros and cons of a remote closing
Before the pandemic, military personnel and other relocating workers were among those who sometimes had no choice but to close on a home remotely, sight unseen. But now, it's an option for anyone.
Pro: They’re more efficient
If you don’t have to be in the same place at the same time as the other parties, document signing becomes a lot easier to coordinate. You can sign most documents on your own schedule, except for the ones that require notarization, and you might not have to take time off work.
Pro: They give you more time to look over your paperwork
When a transaction closes remotely, you’re more likely to receive documents in advance rather than viewing them for the first time at the closing table. Getting the paperwork ahead of time gives you an opportunity to review it carefully.
Tip: Before signing, be sure to ask your real estate agent and mortgage lender questions about anything you don’t understand.
You can also conduct online research to decipher unfamiliar documents and terms and double-check anything someone with a vested interest in the transaction has told you.
Con: You’re more reliant on your real estate agent and home inspector
When you never visit a home in person, you can only see what someone else is willing to show you. You need to deeply trust your real estate agent. They should have your best interests in mind and show you all of the home’s flaws, not just its selling points.
A home inspector can serve as a check on your agent’s integrity, with the caveat that inspectors are trained to notice problems agents might not.
Tip:
Ask for extra input on any areas you’re concerned about. And make sure your purchase agreement includes an inspection contingency so you can back out if you don’t like the inspector’s findings.
Con: You can’t make a final walkthrough
Normally, buyers check out the house one last time before closing to make sure it’s in the same condition it was when they had it inspected.
Again, you’ll have to trust your agent to complete the final walkthrough. You can do it together through a video call, but it still won’t be quite the same as being there yourself.
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How to close on a home remotely
Many buyers like the convenience of completing the entire home purchase online, from touring the property virtually to signing documents electronically.
Buying a home this way doesn’t mean you’re alone in the woods either: You’ll still be able to ask questions about mortgage and purchase documents before you sign them.
1. Find the right real estate agent
Referrals are still a viable way to find an agent when you’re buying a home remotely.
You can also interview at least three agents by phone or video chat to suss out who will be able to view potential homes with the same critical eye you would.
Tip:
Rather than rely entirely on listing photos and pre-recorded videos, you’ll want an agent to take you on a private virtual tour. This process will allow you to ask questions in real time.
When you find the right property, your agent can help you negotiate a deal, just like they would for any other purchase.
2. Receive your paperwork ahead of closing
Your closing agent will send you all of the necessary documents to sign. Take advantage of the time between getting the paperwork and your closing date to review them. You might find errors that need correcting, and you’ll probably have a few questions.
Resolve any issues you might have ASAP to keep your closing on schedule. When you’re ready, sign the documents that don’t require notarization. Your settlement agent will let you know which documents those are.
3. Understand your notarization requirements
Where you live and who your lender is will determine how you’re required to sign closing documents and get them notarized.
Some states and lenders allow for a 100% electronic process, including working with a remote notary who witnesses your signature via webcam.
Tip:
For notarizations, you’ll need to show your photo ID and answer questions to verify your identity.
It’s also possible that your state or lender will require a notary to witness your signature in person. Mask up and meet outdoors or in a well-ventilated room to keep everyone safe. You might need to return signed paper documents via courier or overnight delivery.
4. Pay closing costs by bank transfer
Check with your bank at least several days ahead of closing to find out the process for initiating a wire transfer for closing costs. Make sure you have the settlement company’s instructions for transmitting the funds, including the correct account number.
If you receive instructions via email, call your settlement agent directly to confirm; that the risk of wire transfer fraud is real.
As long as you’re positive you’re sending funds to the right place, wire transfer is a preferred method for sending money because it’s secure and fast: while transfer times vary, banks typically process wires the same or the next business day.
Tip:
Be mindful of cut-off times, weekends, and holidays. Plan to initiate a domestic transfer two days before closing to be on the safe side.
5. Get your keys delivered
The seller won’t be handing you the keys in a remote closing. Instead, the settlement agent will arrange for the transfer. Your keys might be delivered to you, or you might pick them up in person when you arrive at your new home.
