Step 7: Open Escrow
Posted by: raindrop 6 years, 6 months ago
Once you have an accepted offer, we "Open Escrow." Escrow is a neutral 3rd party who handles the transaction. The escrow officer makes sure that all of the required paperwork is completed prior to closing escrow.
During the Escrow term, we will:
- Complete our Due Diligence
- Obtain Financing
- Obtain Title Insurance
Due Diligence is the process where the Seller discloses all known material facts through disclosures, and the Buyer reviews the disclosures, performs inspections, and satisfies themselves with the condition of the home.
A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections.
Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
Obtain a Loan
In the aftermath of the real estate recession, getting a loan has been the most difficult part of the home buying process. That's why it is so important to get pre-qualified early and prepare for the loan process.
During Escrow, the lender will qualify both you, as the borrower, and the house for the loan. To qualify you, you will need to provide extensive documentation on your financial situation To qualify the house, the lender will order an appraisal to establish an unbiased value of the property.
Once all of the underwriting terms of the loan are satisfied, the loan can fund, and the property can close escrow.
Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners" coverage, which protects owners up to the purchase price. In other words, "owners" coverage protects both the mortgage amount and the value of the down payment.
Homeowner's insurance provides fire, theft and liability coverage. Homeowners' policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.
Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Local REALTORS® can explain which locations require such coverage.
Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost with a minimal deductable.
Once you have completed everything above, you will remove your contingencies, and proceed to Step 8: Close Escrow.
For more information, click here or contact Kate Gillingham.
Information provided courtesy of www.realtor.com.Share on Twitter Share on Facebook
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