For first-time home buyers, escrow is a process that might seem shrouded in secrecy and it's true that this process can be a bit confusing. Escrow is a stretch of time that begins when a seller decides to accept an offer you have made on their home, and it ends on the day you actually own your new home.
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 amount of money is not as much as your down payment, and eventually it will be applied to your down payment. It is what is known as "earnest" money showing that you are serious about buying the home. You and the seller will also sign an escrow contract.
After the contract is signed and the check is received, then it's time to handle all of the many tasks that must occur prior to closing. First, the bank that is lending you the money for your home loan will appraise the property to ensure that it is not worth less than you are paying. If the appraisal comes back with a lower value, the bank might deny the loan and you will have to appeal the appraisal, find another lender or re-negotiate the purchase price with the seller.
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.
Assuming there are no major issues upon inspection, you will continue further down the path toward home ownership. This means you will need to get insurance for your new home, and you set this up prior to purchasing the home. In some places, you also must get flood insurance. You also must have a title report and what is known as title insurance. This simply ensures that there are no liens that have been placed against the home. A title company might handle this or it might be the escrow company.
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 amount of money is not as much as your down payment, and eventually it will be applied to your down payment. It is what is known as "earnest" money showing that you are serious about buying the home. You and the seller will also sign an escrow contract.
After the contract is signed and the check is received, then it's time to handle all of the many tasks that must occur prior to closing. First, the bank that is lending you the money for your home loan will appraise the property to ensure that it is not worth less than you are paying. If the appraisal comes back with a lower value, the bank might deny the loan and you will have to appeal the appraisal, find another lender or re-negotiate the purchase price with the seller.
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.
Assuming there are no major issues upon inspection, you will continue further down the path toward home ownership. This means you will need to get insurance for your new home, and you set this up prior to purchasing the home. In some places, you also must get flood insurance. You also must have a title report and what is known as title insurance. This simply ensures that there are no liens that have been placed against the home. A title company might handle this or it might be the escrow company.
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 NixonRealEstate.com site now.