Navigating the Final Stages: What to Expect During Escrow
Congratulations, you're on the path to becoming a homeowner! Follow these recommendations, along with the guidance of your Realtors®, to ensure a smooth escrow and settlement process.
At this stage, you'll be required to make a down payment for your new home. The amount can vary depending on your mortgage terms. Keep in mind that a larger down payment not only accelerates your path to full homeownership but also reduces your monthly mortgage payments.
Throughout the home-buying process, you'll need the assistance of an escrow or settlement company, acting as an impartial third party. They play a pivotal role in ensuring a secure transfer of funds and property deeds. Your deposit check may also be held by an attorney or in the broker's trust account, so ensure sufficient funds are available to cover this check.
The deposit check is typically cashed, and if the sale proceeds as planned, these funds will be applied to the home's purchase price. In case the sale doesn't finalize, you may be entitled to a refund of your deposit, minus standard cancellation fees. In certain situations, the seller may retain this money as liquidated damages. It's wise to discuss the inclusion of a liquidated damages clause with your counsel before signing a purchase contract.
During the escrow period, which is typically around 30 days but can vary, several key steps must be completed according to the contract:
Inspection Contingency: It's crucial to complete property inspections promptly after signing the purchase contract. Unsatisfactory results may lead to contract cancellation.
Financing Contingency: You have a specified period to secure funding after contract signing. If you can't secure funding within the allotted time (and the seller doesn't provide a written extension), you'll decide whether to remove the contingency and proceed without loan approval or cancel the purchase contract.
Title Review: Collaborate with an attorney or title officer to review the title report, ensuring it's "clear" to prevent legal ownership issues. Compliance with local and state property transfer ordinances is essential for a smooth title transfer.
Homeowner's Insurance: Secure homeowner's insurance, as it's typically required before the sale can close. Special insurance, such as fire and earthquake coverage, may take time to obtain, so apply as soon as possible after contract signing.
Utilities Setup: Contact local utility companies to schedule service activation for the closing date.
Final Walk-Through: Schedule a final walk-through inspection to ensure the property matches the contract specifications. Confirm that any fixtures or features promised in the contract are in place.
You've reached the finish line! Once the sale has successfully closed, you can proudly call yourself a new homeowner. Congratulations on this exciting achievement!