Purchasing a house is one of the most exciting, nerve-wracking experiences a person can go through.
While the idea of finally owning a place of your very own is certainly thrilling, everything that happens before you get the keys to your front door can be confusing. Escrow is one of the aspects of the home buying process that many are confused about.
When you’re buying a property, there are three main phases-the offer, the escrow, and the close of escrow.
The escrow phase is a time when the buyer and seller come together to agree on certain terms and conditions that will be put into place during the transfer of the property.
This could include anything from who pays for which closing costs to what happens if the property is not transferred as planned.
Generally, an escrow agent will be used to help both parties reach an agreement and keep track of all the paperwork involved in this process.
So what happens during the escrow process?
Here’s a brief overview of what you can expect:
Entering the Appraisal Phase
First, you’ll want to have the property appraised, as this determines the actual value of the property and ensures you aren’t paying more than it is actually worth.
Secure the Proper Financing
If you haven’t done so already, you’ll need to secure financing for the purchase price that you and the seller agree on. Most times, this will occur during the pre-loan approval process which most real estate agents will have their clients file before showing them their dream homes.
Review Your Home’s Title Report
You’ll need to review the home’s title report to make sure that there aren’t any liens; if there are, they will need to be cleared before the transaction is complete. Make sure to read the final title report, too, to ensure that it’s clear before the purchase is finalized.
An inspection will determine if there are any issues with the house, and if so, what needs to be fixed to prior to the completion of the transaction.
You’ll need to invest in a homeowner’s insurance policy prior to closing, too, and present it to the lender to certify you have the necessary coverage.