We all know that escrow is the period of time that stretches from the time a seller accepts a buyer's offer until the sale closes, but many people have questions about this process. Here are answers to some of the questions you might have about escrow.
Basically, the term escrow refers to the fact that a third party or escrow company will be handling the money and real estate documents that must be dealt with in order to transfer ownership from the seller to the buyer. The process begins by opening an escrow account with your escrow company, and in this account, you provide a set amount of money.
However, this is not your down payment, it is a smaller amount called earnest money, and it simply cements your intention to buy this particular home. The money does get applied to your down payment later on, but temporarily, it just means that you and the seller are in escrow and the seller cannot go into escrow with anyone else. You will even sign a contract to that effect.
Once the money is in the escrow account and the contract is signed, quite a bit begins happening. The bank that is lending you money will appraise the home, and as the buyer, you will be paying for this appraisal. If the appraisal values the home below the purchase price, the bank might not approve loan for the home. While you can argue with the results of the appraisal, it also might indicate that you are really paying too much and might want to either re-negotiate the price with the seller or walk away or find another lender.
Inspections take place during escrow near the beginning days of this period. Inspections are hugely important and it is essential that you hire the best quality inspectors available. They will inspect every inch of the home, including any basement, the attic areas, the outside of the home and the roof. They will test the faucets, electrical outlets and look for issues such as mold or evidence of foundation problems or water damage. You also should have the property inspected for termites and possible have a geological report completed. Geologic reports are a good idea in areas prone to earthquakes or ground movement or if you notice a plethora of cracks inside the home.
Usually the inspector will find a few issues that need attention. They might be minor, such as a window that is difficult to open or perhaps a leaky faucet. Sometimes there are more serious issues, such as mold or perhaps the roof needs to be replaced or the home has serious termite issues. If you don't wish to deal with these big issues, you can walk away from the house and get out of escrow or you can negotiate with the seller to fix some of the problems or provide extra money for repairs in the escrow account once the sale goes through.
You will need to acquire homeowner's insurance and possibly special insurance on top of general house insurance. This might include flood insurance or perhaps earthquake insurance. You will also need to get the title report and title insurance. This report is completed either by your escrow company or a separate title company and seeks to make sure there are no liens against the property.
Your last steps involve walking through the home for a final inspection, and then you get to sign a mountain of paperwork. Finally your lender will fund the loan, pay the seller and the seller's lender and the home will be yours. This whole process usually takes at least 30 days, but it can be longer. While it can be a bit stressful, the end reward is a great new home. If you are searching for Fredericksburg real estate, Kerrville real estate or San Antonio real estate, call Nixon Real Estate today. They specialize in helping buyers find great homes for sale in Texas Hill Country.
Basically, the term escrow refers to the fact that a third party or escrow company will be handling the money and real estate documents that must be dealt with in order to transfer ownership from the seller to the buyer. The process begins by opening an escrow account with your escrow company, and in this account, you provide a set amount of money.
However, this is not your down payment, it is a smaller amount called earnest money, and it simply cements your intention to buy this particular home. The money does get applied to your down payment later on, but temporarily, it just means that you and the seller are in escrow and the seller cannot go into escrow with anyone else. You will even sign a contract to that effect.
Once the money is in the escrow account and the contract is signed, quite a bit begins happening. The bank that is lending you money will appraise the home, and as the buyer, you will be paying for this appraisal. If the appraisal values the home below the purchase price, the bank might not approve loan for the home. While you can argue with the results of the appraisal, it also might indicate that you are really paying too much and might want to either re-negotiate the price with the seller or walk away or find another lender.
Inspections take place during escrow near the beginning days of this period. Inspections are hugely important and it is essential that you hire the best quality inspectors available. They will inspect every inch of the home, including any basement, the attic areas, the outside of the home and the roof. They will test the faucets, electrical outlets and look for issues such as mold or evidence of foundation problems or water damage. You also should have the property inspected for termites and possible have a geological report completed. Geologic reports are a good idea in areas prone to earthquakes or ground movement or if you notice a plethora of cracks inside the home.
Usually the inspector will find a few issues that need attention. They might be minor, such as a window that is difficult to open or perhaps a leaky faucet. Sometimes there are more serious issues, such as mold or perhaps the roof needs to be replaced or the home has serious termite issues. If you don't wish to deal with these big issues, you can walk away from the house and get out of escrow or you can negotiate with the seller to fix some of the problems or provide extra money for repairs in the escrow account once the sale goes through.
You will need to acquire homeowner's insurance and possibly special insurance on top of general house insurance. This might include flood insurance or perhaps earthquake insurance. You will also need to get the title report and title insurance. This report is completed either by your escrow company or a separate title company and seeks to make sure there are no liens against the property.
Your last steps involve walking through the home for a final inspection, and then you get to sign a mountain of paperwork. Finally your lender will fund the loan, pay the seller and the seller's lender and the home will be yours. This whole process usually takes at least 30 days, but it can be longer. While it can be a bit stressful, the end reward is a great new home. If you are searching for Fredericksburg real estate, Kerrville real estate or San Antonio real estate, call Nixon Real Estate today. They specialize in helping buyers find great homes for sale in Texas Hill Country.
About the Author:
Pammy McGrath enjoys reading real estate blogs. If you are searching for licensed Fredericksburg TX real estate agents, or to discover Fredericksburg homes for sale, please visit the NixonRealEstate.com website today.
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