Technology is making life easier and faster. Technology has even made finding a new home easier with online listings and virtual tours. And leaders in the industry now offer digital home lending to give you a fast and easy way to apply for a mortgage. The only thing that hasn’t changed very much is the closing process, at least up until recently.
What is a Traditional Closing?
Traditionally, everyone involved in closing a mortgage meet in one place to finalize the paperwork. The closing table participants for purchase transactions can include the buyers, the sellers, the real estate agents for both parties, the lender, and the person who manages the closing, usually an attorney. For a refinancing closing, it’s often the borrowers and Notary present. The person handling the closing will either be a Notary or will have a Notary available for the closing meeting.
Some of the documents you sign for closing must be notarized, such as the mortgage itself. A Notary Public is someone appointed by your state to serve as a witness for all types of financial transactions.
The Notary, as they are typically called, are required to confirm:
- the identity of people signing legal documents
- that the person signing the documents isn’t doing so out of coercion or intimidation
- that the signer is aware of the contents of the documents they’re signing
Requiring a Notary to notarize certain financial documents helps to avoid fraud in essential transactions. You certainly wouldn’t want someone else to take out a mortgage in your name, or sell a property that you own without your knowledge. Therefore, Notaries are a critical part of the closing process.
What is an eClosing?
People use the term eClosing when any of the closing paperwork is processed digitally. But, right now, you’ll see several different types of house closings, such as:
- Hybrid eClosing: The closing takes place in person and online. The borrower can sign the loan documents online, anytime – the same day they sign the documents in person.
- All-Digital eClosing: The closing is performed from a variety of remote locations, using digital versions of all documents and signatures, and an eNotary appears before the signer via webcam.
The Roadblocks to All-Digital eClosings
Closing a loan electronically only seems logical once you have access to digital home lending. Without eClosings, you do everything else digitally, and then everyone involved has to get into a room and slowly go through the extensive paperwork required to close on a house. eClosings are just the logical next step. But, there are roadblocks.
Requirements for Notarizing Documents
The biggest roadblock has been the issue of notarizing documents. Notaries have been notarizing documents in electronic form, but the signer must still physically appear before the Notary to complete what is commonly called an eNotarization. To be truly digital, Notaries needed a way to perform notarizations remotely.
As a result, states started considering the passage of Remote Online Notarization (RON) laws to make it possible to perform all-digital closings. Where RON laws are in effect, a Notary can notarize a document when the signer appears before them using audiovisual technology.
As of 2019, 22 states have passed RON laws, although there are varying time frames for full implementation. And, different counties within those states may have limitations that will prevent them from jumping on the RON bandwagon as quickly as they’d like to.
Benefits of eClosings
eClosings, when combined with digital home lending, provides homebuyers with exceptional mortgage experiences. The costs are lower, there are no hidden fees, and the process is straightforward. If you’re looking for a digital home lending experience that offers all-digital eClosings wherever they are available, consider Wyndham Capital Mortgage. You can apply today to have your mortgage application processed in minutes.
