Can closing documents be signed electronically?
In the last few years, there’s been a continuous adaption of electronic signing in the mortgage sector. But can closing documents be signed electronically? When it comes to closing, signing the usual promissory notes still requires in-person presence. But in the old days, people had no choice but to head to a real estate agent to sign a long list of documents.
In the digital age, most real estate agents now send sale and purchase agreements, refinance documents, and offer letters for electronic signing. Today, people receive a wide range of real estate-related documents via email. Once you sign the document – it initiates the real estate transaction.
Continue reading to find out how to close a house virtually, the basics of eClosings, the pros and cons of mortgage eClosings, the virtual mortgage closing process, and more.
Can closing documents be signed electronically?
Yes, as long as your state allows the use of Remote Online Notarization (RON) you can certainly sign your closing documents electronically. Thanks to cloud-based, online notarization platforms like PandaDoc Notary, it’s now easier than ever to sign your closing documents within minutes, from the comfort of your own home.
With a remote online closing, all document signers (including the notary) will appear virtually via an audio-visual connection from a RON provider. This means that all signers can appear before the online notary from different locations, making it faster and easier than ever to sign documents.
How to close on a house virtually
Closing falls into hybrid, remote online notarization, and in-person electronic notarization. But whether it’s IPEN, RON, or hybrid eClosing, it is crucial to check on state-specific requirements and laws. Today, you can sign documents like escrow disclosures and closing disclosures electronically.
Any time there is an electronic signature event – it translates into eClosing. Closing on a house in the digital space is a matter of following basic steps.
- Once you find a suitable real estate agent, you will get relevant documents before closing. At this stage, try to understand your real estate notarization requirements.
- When you have reviewed your documents to ensure they are correct and ready to be signed, you can appear before an online notary by selecting a RON platform at your convenience.
- All signers, who will appear simultaneously, must undergo an identity verification process. This usually involves credential analysis and knowledge-based authentication (KBA) questions.
- Once the signer’s identities have been verified, they will appear virtually before a state-commissioned notary public.
- All parties will review the documents before applying their eSignature to the document.
- The notary will apply their eSignature and digital seal to the closing documents, completing the transaction.
- After covering closing costs via a bank transfer, you will get the delivery of the keys to your house.
In virtual settings, RON closing makes the most practical sense. Once a document has been signed online using remote notarization, a secure record of the transaction will be stored for a set amount of years and kept accessible to all signing parties.
Certain states may have specific requirements for signing closing documents online. As such, you should always know any applicable laws before signing your documents.
How an electronic mortgage closing (eClosing) works
Electronic mortgage closing or eClosing is no rocket science. It’s all about focusing on the mechanics of eClosing and its use cases within the virtual space to form a better understanding.
Technically, eClosing uses a secure and dedicated online portal that allows lenders and borrowers to sign closing documents electronically and finalize real estate transactions.
In the virtual space, there is more than one digital signature. For instance, a digital signature can be typing your full name in empty signature space. It can also involve uploading a picture of your proper signature that matches the signature in the document.
When it comes to remote signing, borrowers usually use a third-party signing tool. Similarly, borrowers use video conferencing solutions to communicate with involved parties and proceed with the real estate transaction.
In fact, the use of video conferencing programs is essential to confirm the visual identity of the borrower. In short, eClosing revolves around electronically signing mortgage paperwork and often requires in-person interaction. Oftentimes, eClosing is different from what end-users think it would be.
Assume most eClosings related to mortgages involve in-person meetings. Nonetheless, the eClosing process is faster than old school mortgage closing.
Types of eClosings
A hybrid closing is a combination of conventional face-to-face notarization and modern-day eSigning. The principal signer often receives some documents before the closing date. In some cases, documents are manually signed and confirmed in the presence of a notary, attorney, or closing agent.
In-person Electronic Notarization (IPEN)
IPEN or in-person electronic notarization involves an in-person meeting between the notary public and the borrower. However, all the signed documents are present in the virtual space via a computer or tablet and digitally notarized.
IPEN or eNotarization is often used as electronic notarization or remote online notarization. However, there are several differences between these three. For starters, electronic notarizations have state-specific legal validation to support a variety of real estate transactions.
While all states facilitate public notaries to make the most out of remote online notarization, understand that you may not be able to execute every transaction with RON. The use of IPEN and eSignature also becomes limited when you’re dealing with promissory notes that require a complex system to track the note.
Remote Online Notarization (RON)
Remote online notarization refers to documents that are signed digitally or electronically. RON propels the public notary and the borrower to meet online via a conferencing tool. What’s interesting about remote online notarization is that it interconnects electronic notary seals, electronic signatures, and online communication through a single secure platform.
As a principal signer, you will need access to a specific device if you want to process a remote online notarization. The best platforms have solid device compatibility, while some strictly support laptops or desktops. To complete RON, you need a fast internet connection that can support good sound with stable video streaming.
eClosing with PandaDoc Notary
If you are in search of an all-in-one notary platform, look no further than PandaDoc Notary. It is a dedicated platform that helps individuals and title companies make the most out of eClosing. PandaDoc Notary continues to be an avid supporter of remote online notarization and understands the value of eClosing and how it can transform real estate transactions.
The virtual mortgage closing process
If you understand the conventional house closing process, you’ll get the hang of the eClosing process. In 2022, virtually closing a house has become more common than people realize. Whether you choose the hybrid, RON, or IPEN closing process, make sure to optimize the process and follow through with your current state laws and regulations related to notarization.
When it comes to the virtual mortgage closing process, a notary helps the borrower navigate different aspects of the documents over online video. In the digital mortgage closing process, the notary electronically confirms the identity of the borrower and other important data during an online video meeting.
Pros and cons of mortgage eClosings
Pros of Mortgage eClosings
Mortgage eClosings come with several benefits like:
- Faster turnaround
- A streamlined and optimized closing experience
- Shorter waiting period for funding
- Improved quality and validation of data
- Cost-effective than traditional in-person mortgage involving mailing, storing, and copying documents
- Reduces manual errors and avoids potential risks and confusion
Cons of Mortgage eClosings
Since the pandemic crisis, eClosing has come a long way. Still, there are some drawbacks:
- Despite the convenience, accessibility, and speed of mortgage eClosings, buyers and sellers have to be tech-savvy to make it work.
- Tech-driven mortgage eClosing risks leaving behind previous generations
- Mortgage eClosings require all parties to have a stable and fast internet connection and a functional computer or tablet device.
- Coordinating mortgage eClosings is not easy for everyone
- Legal issues can creep in to defend the process of mortgage closing in different states
Best practices for a remote house closing
If you want to optimize your remote house closing process, you can follow the best practices:
- Get in touch with a loan officer and find out the available eClosing options in your state
- Get a stable and fast internet connection
- Ensure you’re able in the right mental state before actively participating in an online video conference
- Cover the closing costs digitally via a standard wire transfer or direct bank transfer.
- At the time of eClosing call, pay close attention to the notary’s and lender’s guidelines to make sure you sign in the required spaces.
The truth is that digital and electronic closing has created new opportunities for consumers. As new changes unfold – digital and electronic closings are bound to become more ubiquitous. Today, there is a rise in a product that supports the digital integration of promissory notes into the loan processing system. It allows consumers to leverage digital eClosings and use electronic signatures rather than traditional wet-ink signatures on paper documents.
While eClosings are not new, they have become more useful and can support the unique needs of consumers. With eClosings, home buyers are bound to make their online process more convenient. Lenders also praise the cost-effectiveness and promptness of electronic signing. In a broad sense, it is already changing the way people notarize real estate documents and process closing.
Why PandaDoc Notary platform?
At PandaDoc Notary, we help end-users harness the modern-day technology that simplifies and streamlines the closing process. Real estate professionals can use PandaDoc Notary to improve the closing experience. On PandaDoc Notary, you can leverage remote online notarization and eSigning for standard real estate transactions.
Remember, not every state supports eClosing. So, make sure to check the eligibility of a real estate transaction before moving forward with the eClosing. Ideally, the principal and other signers can communicate with a hired mobile loan signing agent to process the closing on time.
Visit PandaDoc Notary to book an eClosing session and learn more information about remote online notarization.