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When homebuyers can’t do an in-person closing, some choose to close remotely instead.
Investors, sellers, and out-of-state buyers have closed remotely on homes for decades. And the COVID-19 pandemic inspired many buyers and sellers to do remote closings, rather than close in-person in a real estate office.
While closing remotely on a home can be more convenient and help you maintain social distance, it might not be offered in your state. And if it’s offered in your state, you still may have to do some parts of the closing in person.
Here are some things you need to know when choosing a remote closing over an in-person closing.
What is a remote closing on a house?
A remote closing on a home proceeds the same way an in-person closing does, except the necessary documents are submitted and signed virtually.
During the home closing process, the lender and homebuyers provide notarized signatures for paperwork such as the mortgage title, closing disclosure form, and other documents to finalize the purchase. If the home purchase requires closing costs, funds are transferred using a wire transfer or certified check to finalize the transaction on or before the closing date.
Closing costs typically cover attorney fees, appraiser fees, mortgage origination fees, and escrow costs.
Whether you close remotely or in person, getting pre-qualified for a mortgage can help make the homebuying process easier. Credible allows you to compare rates and terms from multiple mortgage lenders.
How does a remote closing work?
The way a remote closing works depends on where you live — laws vary by state. For example, some states allow you to go through the homebuying process completely online. But in other states, you’re required to sign documents that need notarization in person before or on the day of closing.
If you live in a state that allows fully remote closings, you might be able to do remote online notarization. This involves uploading notary documents and your ID to confirm your identity online, and connecting with a notary using video chat options like Skype or Zoom.
The pros and cons of remote closings
Although closing remotely can be more convenient than an in-person closing, it also comes with some drawbacks.
- Safer during a pandemic: Closing remotely allows you to avoid coming into contact with people — important for social distancing during the pandemic.
- Can be more convenient: If you live somewhere far away from your new home, remote closing can be more convenient. It also saves you money on transportation costs.
- More time to review all of your paperwork: You might get the paperwork ahead of time with remote closing. This will give you more time to review it versus reading it at the closing table in person.
- Might not be allowed in your state: Depending on what state you live in, remote closings might not be allowed. Check with a real estate lawyer in your state to see if it’s allowed or do some research on your own.
- May need some documents notarized in person: Some states don’t allow fully remote closings, so you may have to get the required documents notarized in person.
- Must rely on professionals: Not visiting the home in person means you’ll have to rely on what your real estate agent or title attorney tells you without inspecting things for yourself.
- No final walkthrough: If you do a fully remote closing, you might not be able to do a final walkthrough of the home and catch any last-minute issues.
How to close on a house remotely
If you want to close remotely on a home, here’s a step-by-step outline you can follow:
- Find an agent versed in remote closings. First, find a real estate agent who has experience with remote closings to help guide you through the process.
- Secure your mortgage pre-approval. Getting a pre-approval will let lenders know you can qualify for a mortgage. It’ll also help you determine how much money you qualify for to purchase a home.
- Let your real estate agent know ahead of time. To make sure the remote closing process goes smoothly, let your real estate agent know in advance that you want to do it.
- Follow the normal homebuying process. Make an offer on the home you like. If it’s accepted, then do a home inspection and get an appraisal done.
- Transfer funds on closing day. Finally, use a wire transfer to transfer funds on closing day. Before you do it, double check to make sure your checking account and routing number are correct. Next, confirm all the information you submit by phone to decrease the risk of wire fraud.
What’s the future of remote closings?
Although remote closings have been happening for decades, it’s uncertain whether they will remain as popular as they are right now.
COVID-19 is one reason more homebuyers are choosing to close remotely, but the pandemic won’t last forever. Once things return to normal, the homebuying process might be different than it was while buying a house during COVID.
Currently, 35 states allow buyers to do remote notarization, which helps buyers looking to do a fully remote closing. If more states join in, and none of the states that allow it stop, it should continue being easy for some buyers to close remotely on a home.
When you’re ready to find financing for your remote closing, you can use Credible to compare mortgage rates from multiple lenders.