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 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.
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.
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.
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.
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 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.
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.
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.
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 find Fredericksburg homes for sale, please visit the NixonRealEstate.com website now.