How Escrow Works
Congratulations on your journey to becoming a homeowner! Here's what you need to know to ensure that the escrow and settlement process goes smoothly:
* Down Payment: You'll need to provide a down payment for the home you're buying. The amount can vary depending on your mortgage, but remember, the more you put down, the less you'll have to pay each month on your mortgage.
* Choosing an Escrow Company: During the home-buying process, you'll need an escrow or settlement company to handle the transaction. They act as a neutral third party, managing the exchange of money and documents. Make sure you have enough funds in your account to cover any deposit checks. It is your choice who you use to close the transaction.
* Deposit Check: The deposit check you provide will be cashed and applied towards the purchase price of the home. If the sale falls through, you may get most of your deposit back, minus any cancellation fees. Sometimes, the seller may keep part of the deposit as compensation for the failed sale, if you are at fault.
* In Escrow Period: This period usually lasts around 30 days, but it can vary. During this time, certain conditions outlined in the contract must be met. These may include:
-- Inspection contingency: Get inspections done promptly after signing the contract to identify any issues with the property.
-- Financing contingency: Secure funding within the agreed-upon timeframe or decide whether to proceed without it.
-- Clear title requirement: Review the title report to ensure there are no legal issues with the property's ownership.
-- Homeowner's insurance: Obtain insurance coverage before closing the sale.
-- Utilities: Arrange for utilities to be transferred to your name when you close escrow.
-- Final walk-through inspection: Confirm that the property matches the contract terms before closing.
Once everything is in order, and the sale has closed, you'll officially become the owner of your new home. Congratulations on this exciting milestone!