You’ve Opened Up an Escrow Account – Now What?
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much
or as little as you want (depending on your mortgage), but remember, the more you put down toward the
total price of your home, the less time it will take you to pay off and the less your mortgage payments will be
every month.
During this period of purchasing your home, you are going to need an escrow or settlement company to act as
an independent third party so that you know when and who to give your money to get the deed to your new
home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes
on during the escrow period. This deposit check may also be held by an attorney or in the broker's trust
account. Make sure that there are sufficient funds in your account to cover this check.
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase
price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your
deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this
money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your
counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the
contract.
The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each
item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you
have come to an agreement with the seller on the closing date and the contingencies. Each contract is
different, but most include the following:
1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is
signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any
reason, you are unable to secure funding during the period of time granted to you by the contract (and the
seller will not provide a written extension of time), you must decide whether you want to remove the
contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
3. A requirement that the seller must provide marketable title.
With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not
have legal issues regarding your ownership.
Check into local and state ordinances regarding property transfer and make sure that you and/or the seller
have complied with them.
Secure homeowner's insurance. This will probably be required before you can close the sale. Due to such
requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period
of time. It would be in your best interest to apply for insurance as soon as possible after the contract is
signed.
Contact local utility companies to schedule to have service turned on when you close escrow.
Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as
the contract says it should be. What you thought to be a "permanently attached" chandelier that would come
with the property might have been removed by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!
Congratulations, you are on your way to owning your very own home! Follow these suggestions (and your
You will be asked for a down payment on the home you are purchasing. You can choose to put down as much
or as little as you want (depending on your mortgage), but remember, the more you put down toward the
total price of your home, the less time it will take you to pay off and the less your mortgage payments will be
every month.
During this period of purchasing your home, you are going to need an escrow or settlement company to act as
an independent third party so that you know when and who to give your money to get the deed to your new
home. The escrow or settlement company will hold your deposit and coordinate much of the activity that goes
on during the escrow period. This deposit check may also be held by an attorney or in the broker's trust
account. Make sure that there are sufficient funds in your account to cover this check.
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase
price of the home. If for any reason the sale is not consummated, you may be entitled to receive all of your
deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this
money as liquidated damages. Prior to executing a purchase contract, it would be wise to speak with your
counsel regarding whether or not it is your best interest to have a liquidated damages clause as part of the
contract.
The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each
item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you
have come to an agreement with the seller on the closing date and the contingencies. Each contract is
different, but most include the following:
1. Inspection contingency: this should be completed as soon as possible after the contract to purchase is
signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract.
2. Financing contingency: once the contract is signed, you have a period of time to secure funding. If, for any
reason, you are unable to secure funding during the period of time granted to you by the contract (and the
seller will not provide a written extension of time), you must decide whether you want to remove the
contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
3. A requirement that the seller must provide marketable title.
With an attorney or title officer, review the title report. The title must be "clear" to ensure that you do not
have legal issues regarding your ownership.
Check into local and state ordinances regarding property transfer and make sure that you and/or the seller
have complied with them.
Secure homeowner's insurance. This will probably be required before you can close the sale. Due to such
requirements as special fire and earthquake insurance, obtaining this insurance may require a lengthy period
of time. It would be in your best interest to apply for insurance as soon as possible after the contract is
signed.
Contact local utility companies to schedule to have service turned on when you close escrow.
Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as
the contract says it should be. What you thought to be a "permanently attached" chandelier that would come
with the property might have been removed by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!
| "Helping hundreds of people find the home of their dreams." Contact me today! |
Emilie Romero,
Broker
Broker
