You might be aware that escrow occurs from the time your offer to a seller is accepted to the minute you actually own the home, but what happens between this time is often a mystery to home buyers, particularly a first-time buyer. Read on and uncover the mysteries of escrow.
Escrow technically refers to the third party that handles all of the real estate documents and deals with the money that changes hand during the selling process. To start an escrow, you open an account and give the escrow company a check.
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.
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.
A few other items that you need to deal with during escrow include securing homeowner's insurance. In addition to regular insurance, in some areas you will need to purchase flood insurance. You also might consider earthquake insurance if that's a potential issue in your area. Title insurance and a title report also must be purchased and obtained. Sometimes the escrow company handles title issues, and sometimes a title company completes this process.
Escrow might seem endless, but usually it only lasts about 30 days or so, although it can be extended by weeks or months. In the days immediately preceding the close of escrow, you will get the opportunity to walk through the home for a last inspection. You will visit the escrow company and sign a myriad of papers and on that last day, the lender will provide the money for your loan, which effectively pays off the seller and transfers ownership to you. The staff at Nixon Real Estate not only can help you find great options for Texas Hill Country real estate, especially Fredericksburg real estate, they also can answer many of your questions regarding escrow.
Escrow technically refers to the third party that handles all of the real estate documents and deals with the money that changes hand during the selling process. To start an escrow, you open an account and give the escrow company a check.
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.
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.
A few other items that you need to deal with during escrow include securing homeowner's insurance. In addition to regular insurance, in some areas you will need to purchase flood insurance. You also might consider earthquake insurance if that's a potential issue in your area. Title insurance and a title report also must be purchased and obtained. Sometimes the escrow company handles title issues, and sometimes a title company completes this process.
Escrow might seem endless, but usually it only lasts about 30 days or so, although it can be extended by weeks or months. In the days immediately preceding the close of escrow, you will get the opportunity to walk through the home for a last inspection. You will visit the escrow company and sign a myriad of papers and on that last day, the lender will provide the money for your loan, which effectively pays off the seller and transfers ownership to you. The staff at Nixon Real Estate not only can help you find great options for Texas Hill Country real estate, especially Fredericksburg real estate, they also can answer many of your questions regarding escrow.
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 check out the NixonRealEstate.com website today.
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