In Escrow: Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your Realtors's advice) so that escrow and closing with go as smooth as possible.
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more cash you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month.
During this period of purchasing your home, you are going to need a title insurance company to act as an independent third party so that you know when and whom to give your money to get the deed to your new home. The title company will hold your deposit and coordinate much of the 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.
The deposit check (earnest money) will be cashed upon deposit. Later, at closing, this money will be applied to the purchase price of the home. If the sale is not consummated, you should receive all of your deposit back. Seller may keep the deposit if you as buyer fail to adhere to the time frames and the terms of the contract. You need to go over the contract carefully with the real estate agent or real estate attorney to be sure you understand.
1. The period that you are "under contract" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened the escrow account, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include the following: 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 re-negotiate or cancel the contract.
2. Financing contingency: Once the contract is signed, you have a period of time to secure funding. If, for any reason, you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract. These days, most sellers expect to see proof of funds to close or a pre-approval for a specific mortgage before they sign the contract. Give yourself the best shot at the home you want by having your financing secured in advance.
3. A requirement that the seller must provide marketable title. With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. Check into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
4. Secure homeowner's insurance. If you take a mortgage, this will be required. It is in your best interest to apply for insurance as soon as possible after the contract is signed. Getting the right policy can take some time.
5. Contact local utility companies to schedule to have service turned on when you close on the property.
6. Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be.
You've made it! Once the sale has closed, you're the proud owner of a new home. Enjoy!