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.
Escrow simply is an account that is held by a third party between the time of an offer's acceptance and the day the new owner takes possession. This third party handles most or all of the legal documents that must be completed during this escrow period, as well as handling the money. The buyer begins by opening an account with the escrow company and giving them a check.
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.
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.
If all goes well, it is time to think about inspections, and it is the buyer who must pay for these inspections. You will want to hire an expert home inspector, as well as termite inspector and perhaps even a geologist to make sure the home has no major problems or verify that you are aware of the problems and still wish to buy the home. The seller also is required by law to disclose any problems with the home, such as problems with the roof or perhaps a leak.
It would be rare to receive an inspection report that doesn't have at least a few minor issues on it. No matter how well the home has been maintained, there can always be a few problems. It might be as simple as the need to upgrade a bannister to current safety standards or perhaps a leaky window. Big issues include major termite damage, a roof that needs to be replaced or the presence of mold. If the report shows major problems, you have a few choices. You can simply walk away from the deal or you can ask the seller to either fix the problems or put money in the escrow account for repairs. You also can ask the seller to lower the price of the 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.
Escrow simply is an account that is held by a third party between the time of an offer's acceptance and the day the new owner takes possession. This third party handles most or all of the legal documents that must be completed during this escrow period, as well as handling the money. The buyer begins by opening an account with the escrow company and giving them a check.
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.
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.
If all goes well, it is time to think about inspections, and it is the buyer who must pay for these inspections. You will want to hire an expert home inspector, as well as termite inspector and perhaps even a geologist to make sure the home has no major problems or verify that you are aware of the problems and still wish to buy the home. The seller also is required by law to disclose any problems with the home, such as problems with the roof or perhaps a leak.
It would be rare to receive an inspection report that doesn't have at least a few minor issues on it. No matter how well the home has been maintained, there can always be a few problems. It might be as simple as the need to upgrade a bannister to current safety standards or perhaps a leaky window. Big issues include major termite damage, a roof that needs to be replaced or the presence of mold. If the report shows major problems, you have a few choices. You can simply walk away from the deal or you can ask the seller to either fix the problems or put money in the escrow account for repairs. You also can ask the seller to lower the price of the 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 looking for licensed Fredericksburg TX real estate agents, or to find Fredericksburg homes for sale, please visit the Nixon Real Estate website today.
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