Buying a Home The Escrow Process Explained

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					      Buying a Home:
The Escrow Process Explained
  Buying a Home: The Escrow Process Explained


  If you’ve recently had your offer on a house accepted by the seller, you must be ready
  and waiting to move in! If you're on the other end of the transaction, you want your
  money! You’re also likely to be wondering, “What is escrow and why does it take so
  long?”


  Escrow may be the last hurdle in buying or selling real estate, but it's a hurdle that
  can take a while. Let's discuss what escrow really is and what needs to happen for
  everything to go smoothly.


  The Purpose of Escrow


  The escrow company simply acts as an impartial third party. They ensure that
  everything that must be done has been done before the property and the funds are
  swapped. So, they hold the money and the property and then transfer them to the
  proper parties when all the requirements have been met.


  For example, they would hold any earnest monies. How could you be sure the seller
  wasn’t going to cash your check and then refuse to sell you the house?


  The escrow company handles the money and the required documentation.


  Steps in the Escrow Process


     1. Appraisal.Your lender will have the home appraised, as it is part of their
        process to approve your home loan. It also serves as a second opinion regarding
        the fairness of the selling price. They’re making sure that the amount of the loan
        isn’t greater than the value of the home. The bank is always concerned about
        the collateral on the mortgage.


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2. Financing.Hopefully, you already have your financing secured, but it’s not
   uncommon for the lender to have additional requirements that must be met
   before they’ll provide the funds.Usually the underwriter working for the lender
   makes these requests.

       The escrow company helps to ensure that these additional requirements
       are met before the closing takes place.



3. Various Inspections.A home inspection, termite / pest inspection, hazard
   inspection, and more are normally required before the bank will approve the
   loan. The bank doesn't want to make a loan until it’s fully aware of the condition
   of the property.

       The home inspection will look at the electrical system, plumbing,
       structure, roof, and general condition of the property. It will also assess
       any necessary repairs. Pest inspections look for termite damage and any
       other type of infestation that would reduce the value of the property or
       require extermination.



       The bank’s primary concern with these inspections is that they’ll be able
       to get their money back out of the property should the buyer fail to make
       the mortgage payments.



4. Title Search.Do the sellers even own the house? Are the property taxes paid
   up? Are there any other liens against the property? A title search will make sure
   there are no clouds on the title.

       Basically, the title search ensures that there are no creditors with any
       claims against the home and that the seller actually has the right to sell
       the house. It also looks for any other people that might have an ownership
       claim on the property.




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                                              For example, can the husband sell the house without the wife’s
                                              agreement? Are there any uncles, cousins, business partners, or anyone
                                              else that has a claim to the home?



                                              Title insurance is also part of the closing process. This means the
                                              insurance issuer will deal with any title problems that may have been
                                              missed during the title search.



                                      5. Insurance.Your lender will require home insurance. Obviously, they want to
                                         know that they will be paid if the house is destroyed.




                                   While this list is not inclusive, it covers the basics of the escrow process. It varies from
                                   state to state. Your escrow company, lender, real estate attorney, and real estate
                                   agent are all very familiar with the process. Don't be afraid to ask any questions you
                                   may have so you can help expedite the process where necessary and move into your
                                   new home as soon as possible.




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Curtis Rose is an experienced professional with extensive experience in all
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