With the developing technology, most businesses are doing their transactions online. The real estate market has adopted this trend, changing how mortgage closings function. Real estate uses eClosing, a process where involved parties use digital platforms to sign partially or wholly and close documents online. Young people currently do most of their businesses online, making eClosing a good option when buying homes.
Traditionally you had to sign many documents in-person to finalize the process of buying a new home. eClosing has made the real estate process convenient, time-saving, secure, and flexible. eClosing allows involved parties to transact in different locations without meeting face-to-face. EClosing became popular during the covid-19 pandemic, as it was less safe to close mortgages in person.
Definition of eClosing
eClosing is a secure digital portal that you use to sign partially or completely and close documents online. It allows lenders to organize, send the eNote and share data with title agents, real estate agents, and home buyers. Buyers and sellers can sign the closing documents in different locations. In some cases, involved parties prefer to sign essential closing documents like promissory notes or deeds of trust in a person. Since everything happens digitally, the closing appointment can be performed physically or remotely through audiovisual technology. After completion, the required documents are electronically transferred to and recorded by the county, also called eRecording.
In simple terms, eClosing involves digitally signing different types of documents electronically and closing online. There are different types of eClosing to help you understand more about the mortgage. These types include:
Remote notarization is often done over an audio-video app. All the documents are signed digitally. Many individuals have adopted remote notarization, but not all states allow it.
In-person e-notarization is also known as IPEN. It involves all participants meeting physically, but all documents are signed electronically.
Like IPEN, hybrid e-closing involves participants meeting physically, but not all documents are signed electronically. Some documents are signed with a pen. Hybrid e-closing is the most popular form of closing. Research shows about 89% of home buyers use hybrid e-closing.
How eClosing functions
Eclosing does not only revolve around eSigning apps. It involves several tech factors focusing on sending, accepting, and reviewing information among multiple participants. The eClosing process involves six key factors, which include:
eDelivery is the electronic transfer of documents to several involved participants. Document delivery or transfer can involve a settlement agent, buyer, count recorder and lender. eDelivery allows sending the acknowledgment documents to the buyer. It can also apply when sending documents like security instruments or eNote. Most eDelivery devices have Outlook and Gmail services, making it easier for you to attach and send files in PDF format.
eSignatures are an essential aspect of the eClosing process. It consents and affirms involved participants through electronic signatures. eSignatures have replaced old-school wet ink signatures. eSignature apps have different formats depending on the type of your document.
The eClosing platform allows uploading and reviewing documents online; beforehand, involved participants make e-signs. eSignature apps enable title agencies and lenders to track all paperwork and overall eClosing procedure. The eClosing platform allows multiple parties instantly coordinate, track, review and upload documents.
eNotarization and remote online notarization (RON)
Electronic notarization is the last step in the eSigning process. The involved parties must be present physically with the notary office and verify the records for ownership transfer. eNotarization can be partial or fully digital, while remote online notarization is entirely digital. Notaries apply the electronic seal on particular documents, finalizing the transaction. Digital notarization has many benefits and outweighs the traditional way, but it is not legal in all states.
After the deed is transferred to the new owner and distribution of funds, the documents are stored in a secure online vault. This storage only allows the involved parties to access the documents eRecording.
The final process of eClosing is eRecording. It involves sending all the necessary documents electronically to the county office for eRecording. After eRecording, the county sends the papers back to the settlement company.
eClosing involves closing a real estate transaction electronically. Some or all of the closing documents are signed online via a secure digital platform. Since technology is evolving quickly, and most people are doing business digitally, eClosing is the right direction.