The concept of signing paper documents is slowly becoming the relic of a bygone era, going the way of landline phones and paper maps. These days, when you need to sign important documents like mortgage loan paperwork, you can do it digitally. In fact, there’s an entire digital closing process to culminate the homebuying experience, called an “eClosing.”
What’s an eClosing?
eClosings are a completely digitized closing process. Instead of signing a mountain of paperwork by hand, all paperwork is provided in a secure portal where you can digitally sign your documents. This includes everything you’d normally sign in-person: closing disclosures, mortgage note, escrow statements, deed, title, etc.
Once your digital signature is verified, the documents are then electronically transferred and filed as proof of your ownership. You’ll also get digitally signed copies of everything in the loan package for your own records.
How eClosings Work
eClosings involve all the same paperwork of a traditional in-person closing; however, they’re more efficient because everything is digital. Here’s what you can expect from a run-of-the-mill eClosing:
- Your lender will upload all documents to a secure portal or platform for you to review.
- Your lender will pre-fill and sign all areas before handing it over to you to do the same.
- All documents will be annotated to accept signatures and initials where they’re needed.
- You’ll review the loan package and click-to-sign or sign virtually where required.
- After signing, you’ll submit documents through the secure portal for the lender to review.
- After reviewing signed documents, your lender will finalize and send copies to all parties.
Different Types of Closings
The closing process varies from person to person and situation to situation. There are 3 types of closings homebuyers can consider:
- In-person closings are sometimes preferred by homebuyers who have questions or who feel more comfortable signing paper documents vs. using signature technology. While they take longer, it’s sometimes worth it for peace of mind.
- A hybrid closing functions much the same way as an in-person closing; however, you’ll sign some of your documents digitally and some of them in person—if they require notarization. With this method, you can typically close in less time, reduce the risk of signing errors and review your documents at your own pace.
- Full eClosing happens completely online. You’ll access and sign all documents online, verifying signatures through technology called remote online notarization (RON). Keep in mind, you’ll still need to video-verify notarized documents during this process (if it’s allowed in your state).
There’s no right or wrong way to close on a home—only the way that works best for all parties. Increasingly, full and hybrid eClosings are preferred, since they’re quick and easy. Of course, there’s nothing wrong with a good old-fashioned sit-down closing!
The Pros and Cons of eClosing
The benefits of eClosing chiefly revolve around its ease of execution. With everything available digitally, through a secure portal, you can review and sign quickly. It’ll also expedite the closing process—most signed paperwork is available to all parties immediately after it’s submitted. Most importantly, virtual closings reduce the risk of errors and missed documents.
The drawbacks of eClosing? Your lender might not offer them, or you may live in a state that doesn’t offer RON. This process can also be intimidating for those who aren’t familiar or comfortable with signature technology.
Getting ready to become a homeowner?
Closing on a home is exciting, but few homebuyers look forward to the marathon document-signing session that comes with closing. eClosing makes it quicker, easier and more accommodating!
Navy Federal Credit Union offers hybrid eClosing options to make closing as hassle-free as possible. Check out our mortgage loan options, and reach out to us today to learn more about the fundamentals of closing on a home.
- If you’re getting ready to buy a home, make sure you get preapproved first! Preapproval is the best way to start your search and will put you in a position to place the winning bid when you make an offer.
- Talk with your Navy Federal loan officer about a hybrid eClosing to determine if it’s right for you.
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.