You've Opened Escrow, Now What?
Congratulations, you are on your way to owning your very own home!Follow these suggestions (and your realtor's advice) so that escrow andsettlement with go as smooth as possible.
You will be asked for a down payment on the home you arepurchasing. You can choose to put down as much or as little as you want(depending on your mortgage), but remember, the more you put downtoward the total price of your home, the less time it will take you topay off and the less your mortgage payments will be every month.
During this period of purchasing your home, you are going toneed an escrow or settlement company to act as an independent thirdparty so that you know when and who to give your money to get the deedto your new home. The escrow or settlement company will hold yourdeposit and coordinate much of the activity that goes on during theescrow period. This deposit check may also be held by an attorney or inthe broker's trust account. Make sure that there are sufficient fundsin your account to cover this check.
The deposit check will be cashed. Assuming the sale goesthrough, 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 toreceive all of your deposit back, less standard cancellation fees. Incertain instances, the seller may be able to retain this money asliquidated damages. Prior to executing a purchase contract, it would bewise to speak with your counsel regarding whether or not it is yourbest interest to have a liquidated damages clause as part of thecontract.
- The period that you are "in escrow" is often 30 days,but may be longer or shorter. During this time, each item specified inthe contract must be completed satisfactorily. By the time you haveopened escrow, you have come to an agreement with the seller on theclosing date and the contingencies. Each contract is different, butmost include the following: 1. Inspection contingency: this should becompleted as soon as possible after the contract to purchase is signedas unsatisfactory results of the inspection may mean that you will wantto cancel the contract.
- Financing contingency: once thecontract is signed, you have a period of time to secure funding. If,for any reason, you are unable to secure funding during the period oftime granted to you by the contract (and the seller will not provide awritten extension of time), you must decide whether you want to removethe contingency and take your chances on getting a loan. You may chooseto cancel the purchase contract.
- A requirement that the seller must provide marketable title.
With an attorney or title officer, review the title report. Thetitle must be "clear" to ensure that you do not have legal issuesregarding your ownership.
Check into local and state ordinances regarding propertytransfer and make sure that you and/or the seller have complied withthem.
Secure homeowner's insurance. This will probably be requiredbefore you can close the sale. Due to such requirements as special fireand earthquake insurance, obtaining this insurance may require alengthy period of time. It would be in your best interest to apply forinsurance 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, youshould make sure that the property is exactly as the contract says itshould be. What you thought to be a "permanently attached" chandelierthat would come with the property might have been removed by the sellerand 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!
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