Escrow: Now What?

Exciting Times Ahead! You're on the path to owning your dream home. Follow these steps (and your real estate agent's guidance) to ensure the escrow and settlement process is smooth.

When buying your home, you'll need to make an initial payment. You have the choice to pay as much or as little as you like, based on your mortgage plan. Remember, a larger initial payment means you'll pay off your home quicker and your monthly mortgage payments will be lower.

During this time, an escrow or settlement company will be needed. They'll act as a neutral party, holding your initial payment and guiding you through the escrow period. Your payment can also be held by an attorney or in the broker's trust account. Ensure you have enough funds for this payment.

Your initial payment will be processed. If everything goes well, this amount will be deducted from the total price of your home. If the sale doesn't happen, you might get most of this money back, minus some fees. In some cases, the seller might keep this money. It's a good idea to talk to a lawyer before signing the purchase contract, especially about including a clause regarding this payment.

The escrow period typically lasts about 30 days but can vary. During this time, all conditions mentioned in the contract need to be met. Once you start escrow, you and the seller will have agreed on a closing date and conditions. Common conditions include:

1) Inspection: Do this quickly after signing the contract. If the inspection results aren't good, you might want to cancel the contract.
2) Financing: After signing the contract, you'll have time to secure a loan. If you can't get a loan in this period, and the seller won't extend your time, you'll need to decide if you want to continue without the loan contingency or cancel the contract.
3) Clear title: Review the title report with a lawyer or title officer to ensure there are no legal issues with ownership. Also, check local and state laws about transferring property.
4) Homeowner's insurance: You'll likely need this before closing the sale. Apply for it as soon as the contract is signed.
5) Utility services: Arrange for utilities to be turned on when you close escrow.
6) Final inspection: Ensure the property is as agreed in the contract. Check everything is in place as expected.

Congratulations! Once the sale is complete, you're the proud owner of a new home!