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.
This check is not usually cashed and basically just holds the property for you. By giving this check and signing a contract with the seller, it locks you into escrow together. The seller can accept backup offers but cannot go into escrow with anyone else. The check you give the escrow company eventually will be used to cover a portion of your down payment.
After you have started up the escrow process, several important things must happen. Your bank or financial institution that is lending you money will appraise your home, and the cost of this appraisal generally is paid for by the buyer. If the appraised value of the home is less than the selling price, the bank might not give you a loan. You can argue the point and even get a second appraisal, but if the appraisal value is lower, it means that the bank and probably you will be paying more than the home is truly worth.
In addition to the appraisal, you also will want to have the property inspected carefully. Just like with an appraisal, these inspections generally are paid for by the buyer. You need to hire a home inspector and probably a termite inspector. If you live in any area prone to earthquakes or ground movement, a geologist is another professional who should come out and inspect the home. Of course, in addition to these inspections, the seller must disclose any known problems with the home.
It's unlikely that the inspector won't find at least a few little issues, but often they are fairly minor and can be repaired easily. The seller might even fix a few of them prior to moving out, if you ask. However, if the home has mold or termites or a bad roof, these are very serious issues and you need to think about your options. These problems can be fixed, but usually at a pretty high cost so you will either want to ask the seller to make repairs or put money in the escrow account to cover the cost of the repairs after closing. If the seller won't negotiate, you have the option of continuing the escrow anyway or canceling the contract and looking for another home.
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.
This check is not usually cashed and basically just holds the property for you. By giving this check and signing a contract with the seller, it locks you into escrow together. The seller can accept backup offers but cannot go into escrow with anyone else. The check you give the escrow company eventually will be used to cover a portion of your down payment.
After you have started up the escrow process, several important things must happen. Your bank or financial institution that is lending you money will appraise your home, and the cost of this appraisal generally is paid for by the buyer. If the appraised value of the home is less than the selling price, the bank might not give you a loan. You can argue the point and even get a second appraisal, but if the appraisal value is lower, it means that the bank and probably you will be paying more than the home is truly worth.
In addition to the appraisal, you also will want to have the property inspected carefully. Just like with an appraisal, these inspections generally are paid for by the buyer. You need to hire a home inspector and probably a termite inspector. If you live in any area prone to earthquakes or ground movement, a geologist is another professional who should come out and inspect the home. Of course, in addition to these inspections, the seller must disclose any known problems with the home.
It's unlikely that the inspector won't find at least a few little issues, but often they are fairly minor and can be repaired easily. The seller might even fix a few of them prior to moving out, if you ask. However, if the home has mold or termites or a bad roof, these are very serious issues and you need to think about your options. These problems can be fixed, but usually at a pretty high cost so you will either want to ask the seller to make repairs or put money in the escrow account to cover the cost of the repairs after closing. If the seller won't negotiate, you have the option of continuing the escrow anyway or canceling the contract and looking for another home.
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 likes 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.
No comments:
Post a Comment