Escrow: What's Next?
Congratulations! The seller accepted your offer and you are now in the process of becoming the new owner of your perfect home! Here is some sound advice (and listen to your Realtors's advice as well) so that the escrow and closing are easy and problem-free.
Once your offer is accepted by the seller, it is time to put a down payment on the home you are buying. You can opt to put down the least required, or more if you want (depending on your mortgage), but remember this, putting down more money up front is a great way to ensure your monthly mortgage costs are less and that your home is paid off quicker.
During this escrow period, you are going to need an escrow or title company to act as an independent third party. This will tell you when and who to give your deposit check to, in order to get the deed to your new home. The escrow or settlement company will hold your deposit and coordinate the transaction activity that goes on during the escrow period. This deposit check may also be held by an attorney or in the broker's trust account. Be certain that there are sufficient funds in your account so that your check clears without incident.
Your deposit check will be cashed. This money will be applied to the purchase price of the home as long as the sale goes through. If for any reason your home purchase is not completed, you may be able to receive your full deposit amount back. Sometimes, there may be cancellation fees. Additionally in some cases, the seller may be able to keep your deposit. Prior to signing a purchase agreement, it would be a good idea to speak with your agent about adding a clause as part of your contract to help shield you from potential loss.
1. The period that you are "in escrow" is often 30 days, but may be longer or shorter. During the escrow period, each requirement in the purchase agreement must be satisfied. By the time escrow has begun, you will have reached an agreement with the seller on the date of your closing and any contingencies. Each contract is unique to the situation, but most include all of these: 1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: Once the contract is fully executed, you have a period of time to secure your mortgage loan. If, for any reason, you are unable to secure your loan during the period of time allotted in the contract (the seller may choose to grant you an extension on the time frame), you must choose whether you want to remove the financing contingency and take your chances on getting loan approval. You can also opt to cancel the contract at that time.
3. A requirement that the seller must provide marketable title. With an attorney or title officer, go over the title commitment. You must have a clear title to be sure that you will not have legal issues with your home ownership. Have your Realtor explain local and state ordinances regarding transfer of property and make sure that you and/or the seller have complied with them.
4. Secure homeowner's insurance. This insurance quote will be required before you can close the sale, except in a few select circumstances. Due to such requirements as possible fire or earthquake insurance, obtaining this insurance may take extra time. It would be wise to get your insurance in order as soon as possible after the purchase agreement is signed.
5. Contact local utility companies to have your utility services turned on. This should be effective on the day you close on the sale of your new home.
6. Schedule the final walk-through inspection. Doing a final walk-through is your "last" chance to make sure the property is in the expected condition before you sign the papers to complete a sale. It is also to look for missing items. For instance, something you expect to be a permanent fixture that would come with your new home may have been removed by the seller and replaced with something completely different.
Once you made it to the closing table, paper work is all signed and filled out and you have recieved the keys- the sale is done! You are officially a home owner. Congrats!