Navigating the Escrow Process: A Step-by-Step Guide

Congratulations on taking a significant step towards homeownership! The escrow phase is a pivotal part of the home-buying journey. To ensure a seamless experience, follow these guidelines and heed the advice of your Realtors®:

1. Down Payment: You’ll be required to make a down payment on your new home. The amount can vary based on your mortgage terms. A larger down payment can reduce your monthly mortgage payments and the overall loan tenure.

2. Choosing an Escrow/ Settlement Company: This company acts as a neutral third party, ensuring all transactions are conducted transparently and fairly. They’ll hold your deposit and oversee many activities during the escrow phase. Ensure your deposit check is covered by sufficient funds in your account, as it will be cashed. If the sale proceeds, this amount will be deducted from the home’s purchase price. If the sale falls through, you might get your deposit back, minus some cancellation fees. However, in some cases, the seller might retain this deposit. It’s advisable to consult with legal counsel about the implications of a liquidated damages clause in your contract.

3. Duration of Escrow: Typically, the escrow period lasts 30 days, but it can vary. During this time, all contract stipulations must be met. Most contracts include:

• Inspection Contingency: Conduct inspections promptly after signing the purchase contract. Any unsatisfactory findings might lead you to reconsider the purchase.
• Financing Contingency: After signing the contract, you have a set period to secure your loan. If you can’t secure funding within this timeframe and can’t get an extension, you might have to decide between removing this contingency or canceling the purchase.
• Title Clarity: Ensure the seller provides a marketable title. Review the title report with a legal expert to ensure no future ownership disputes.
• Local and State Ordinances: Ensure all local and state property transfer regulations are adhered to.

4. Homeowner’s Insurance: Most sales require you to have homeowner’s insurance before closing. Depending on your location, securing this might take time, especially if special insurance types, like fire or earthquake insurance, are needed.

5. Utility Setup: Coordinate with local utilities to have services activated upon closing.

6. Final Walk-through: Before finalizing, inspect the property to ensure it matches the contract’s specifications. For instance, fixtures you assumed were included might have been replaced.

And there you have it! Once all these steps are completed and the sale is finalized, you’ll be the proud owner of your new home. Enjoy this new chapter in your life!