There’s a lot about the home buying process that has been digitally transformed in recent years. From virtual home tours to online real estate listings, you no longer have to leave your current home to buy a new one. The same goes for the paperwork that goes along with the home buying process. One such example are eClosings.
An electronic mortgage closing, also known as eClosings, is the process of electronically receiving and signing a majority (or an entirety) of loan documents with a digital signature. The idea behind eClosings is to help cut down on the amount of time spent physically signing closing documents and to get rid of all the additional fees and frustrating delays that come with forgotten signatures. Best of all, eClosings are able to be done from home — you never even have to leave!
But how does closing online fit in among the other types of closings, and how does it actually work? What’s more, how does closing online handle notaries and signatures? All this and everything else you need to know about closing online will be discussed below.
The Four Types of Closings
When it comes to closing online, there’s actually more than one way to get the job done. The belief is that there would simply be two different ways to close — in-person or online — but the truth is that there are actually four main ways to do it, and three of which involve eClosings.
First and foremost is also the most traditional: simply closing in-person, pen in hand, and notary present to verify your identification. This is how mortgage closing has been done for decades, long before the internet became a key part of the closing equation.
Hybrid eClosings take things a step further than traditional closing by moving some of the less important documents to the internet while reserving all the most important ones for an in-person signing. With hybrid eClosings, there’s still a need for a physical notary to be present to verify identities during the signing process.
Beyond hybrid eClosings is in-person eClosings, which might sound contradictory but actually makes a lot of sense: Every document is signed digitally via a laptop or a tablet, but the signing is done in-person in the presence of a notary for the traditional identification verification process.
Last, but certainly not least, is closing online with a remote notary. As with in-person eClosings, all documents are signed and delivered virtually, but the notary is present virtually instead of physically. Even ID verification is done virtually, with the notary typically appearing on a webcam. Without question, this is the most digitized, most remote form of closing online. But how exactly does it work?
How eClosings Work
As you might have been able to surmise, closing online isn’t all that different from traditional closing. There’s still the need for signatures, still the need to verify ID, and still the need for a notary, it’s just not always conducted in-person with a pen and paper.
To verify your identity virtually, eClosings require you to upload an image of your ID — such as a passport or government-issued driver’s license — and compares that image with information from a government database. After your upload, automated technology analyzes and scans the uploaded image for distinctive authentication features, then confirms or denies your identity — all in a matter of seconds.
It’s important to remember that a notary is only required for the Transfer Deed and the Security Instrument. These two documents establish the transfer of property ownership, and as such, they have to be notarized and recorded in the public register. Other documents might require a notary here or there depending on the scenario, but these two will always need a notary. For this reason, financial documents and other general documents are much easier to reserve for closing online — no notary is required, making eSignatures easier.
Notaries and Signatures
When closing online, you should be prepared for any one of the several different kinds of notaries and signatures. Beyond traditional wet ink, eClosings could require a plain text signature where you simply type your name in a standard font, a script font signature where you type your name in a cursive font, or a digital capture where you use your finger or a stylus to sign your name on a touch screen device.
The same goes for notaries, which could present themselves as a Remote Online Notary (RON) via digital verification software, Paper Remote Online Notarization (PRON) via mail-in verification services, Remote Ink Notarization (RIN) via webcam, Traditional Wet Ink Notarization (TWIN) via an in-person signing, or In-Person Electronic Notarization (IPEN) via in-person digital signing. It’s no surprise that the use of electronic promissory notes grew 5,000% in 2019 — remote notaries and eSignatures make it so simple.
Benefit of eClosings
There are countless benefits to eClosingd beyond simple convenience. There’s the added speed of eSigning, making it possible to deliver important documents much faster. There’s the extra security of eSigning, with secure financial documents benefiting greatly from the encryption provided by closing online. Not to mention, closing online Is a lot more friendly for the environment, cutting down on the need to travel, the need to print out documents, and the need to ship those documents out after signing. In 2019 alone, more than a dozen states passed RON legislation — bringing the grand total to 34 U.S. states with RON potential. It’s only a matter of time before all 50 allow for true eClosing.
The Bottom Line: Everything About eClosings
When all is said and done, eClosings are an incredibly convenient and remarkably simple way to further streamline the home buying process. Long gone are the days when everything had to be so drawn out and strenuous with in-person signing after in-person signing and days of waiting around for things to be delivered to the right person. From eClosings to eSigning and everything in between, the digitization of real estate has been a huge help for countless home buyers, home sellers, real estate agents, brokers, title companies, and the like. With over 80% of title professionals interested in or already completing some form of eClosing, it’s clear to see just how huge this new technology really is for the world of real estate.
It’s not just the closing process that has made the switch to virtual — real estate transactions have gone digital, as well. Paymints.io is a fully electronic, completely secure, and compliant solution that gets rid of the need for borrowers, buyers, sellers, and real estate agents to write paper checks. Whether you’re a broker, an agent, or a title company, you can disburse funds to clients or vendors using paymints.io. The goal is to cut down on time, avoid having to make a trip to the bank, reduce fees, and help the environment by minimizing both the use of paper and emitting CO2.
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