Buying a home should be an enjoyable experience. Knowing what to expect during escrow process can remove some of the doubt and fear that are natural when buying a home.
Getting Your Offer Accepted and The Escrow Process Started
It is critical to understand that an accepted offer is considered to be when you have received and confirmed receipt of a fully executed purchase agreement. This is important because this is when the clock starts ticking for escrow, and for you to complete your home purchase.
Once you have received an accepted offer, The listing agent and seller will agree on an escrow company to handle your transaction. The Escrow company chosen is a neutral third party that will hold both parties to their end of the agreement. They will ensure the transfer of ownership to the buyer, and the transfer of funds to the seller. Once you have escrow opened, the process begins
Once Escrow is opened, you will be notified and given an escrow number.
You as the buyer will be required to deposit your earnest money into escrow usually within one to three days of acceptance.
Escrow will issue a copy of escrow instructions that summarize the purchase contract. Important things to note: Purchase Price, Credits, Closing Cost Allocation and Close of Escrow date.
The Discovery Phase
Escrow will also order the following reports for your review:
Natural hazards Report Preliminary Title Report Escrow Instructions
HOA Documents( if needed) and Other Documents needed to complete your home purchase
During the discovery period, the seller will provide you with their set of disclosures on the home. You will need to review and point out anything that you are not satisfied with. Ask your Realtor to answer questions you might have, or request further information from the seller if something is in question.
Inspecting Your Future Home
You will need to perform your inspections to determine the condition of the property. This is an out of pocket expense of about $250 – $350 depending on the size of the home. You should choose an independent Home Inspector to assure you an unbiased look at the home.
If the inspection report comes back with items requiring repair, you have the right to request that those items be fixed by the seller before moving forward with your purchase. The seller reserves the right to agree to the repairs if he wants to sell, or to notify you that they are not planning on making repairs.
If the seller does not agree, you have the right to cancel the contract.
The Key in Buying a Home Revolves Around Your Financing
Also, the most critical part of the escrow process is the LOAN Approval. Escrow will be in contact with your lender to check on progress for the seller. The loan is usually the longest part of the transaction. It is important that you choose the right loan officer for the job.
Remember, this is your home purchase, so do not leave anything to chance. Follow up with your loan officer ever few days to check on the status of your loan. Be sure to ask if there is any additional documentation that is required to achieve loan approval.
Once you have the loan approval, your lender will order loan documents to be drawn and sent to escrow. Escrow will receive your loan documents, and prepare an estimated closing costs statement. You will be asked to sign at the escrow officer or they will arrange a mobile notary to come to you to sign the loan documents.
Signing on the Dotted Line and Taking Ownership
Be sure to review the terms of your loan, and the closing costs associated with your purchase. If at anytime during the signing process you have questions, feel free to stop, call your Realtor or Loan Officer to discuss any questions you might have.
After the loan documents are signed, escrow will review all the documentation to make sure they have all the necessary signatures, and ‘split’ the file to send part of the documents to the title company and the other part to the lender.
The lender will verify receipt of the signed loan documents. If everything is there, and there are no additional conditions from the lender, they will then request that your loan be funded.
When escrow can verify that they have received the money for the purchase, they will the ask the Title company to take the Grant deed the following day to the county recorders office to record the sale and transfer of ownership.
Until the day the title is transferred, the property still belongs to the bank or seller. You will not be able to move in early or make any alterations to the home until the house is officially yours. Your Realtor will be contacted by escrow to let them know that ” You have Recorded” which means ownership has been transferred and the home is officially yours. You can expect the overall escrow process to take 30-45 days.
Planning helps reduce the stress of buying a home.
When planning to buy a home you must take into account the time for the escrow process. If you have a move-in date in mind be sure to add in about 2 months for the escrow process to close.
We often see home buyers planning for an Exact date to move. Just know that there are numerous variables that can affect when your home purchase will be complete. Give yourself some wiggle room. This will cut down a major part of the worry.
Knowing the escrow process and preparing for what is involved will help you make your home purchase more enjoyable. We hope you find this information useful.