As you move forward with your home purchase, it's important to understand the role of escrow and settlement, which are designed to help facilitate a smooth and secure transaction. Here are some tips to help you navigate the process:
- Understand the role of the escrow or settlement company. This independent third party will hold your deposit and coordinate many of the activities that take place during the escrow period, including the transfer of funds and the recording of documents. They will also ensure that all parties meet their obligations according to the terms of the purchase contract.
- Determine your down payment. You will be asked to provide a down payment, which can vary depending on your mortgage and financial situation. Remember, the more you put down, the less your mortgage payments will be every month. Make sure you have sufficient funds in your account to cover the deposit check, which will be cashed and applied to the purchase price of the home.
- Be aware of contingencies. The period of time that you are "in escrow" is typically 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. The contract may include contingencies such as inspection, financing, and title requirements, which must be addressed before the sale can be completed.
- Complete a home inspection. It's important to complete a home inspection as soon as possible after the contract is signed, as unsatisfactory results may mean that you will want to cancel the contract. Make sure you work with a reputable inspector and review their findings carefully.
- Secure financing. Once the contract is signed, you will have a period of time to secure funding. If you are unable to secure funding during this time, you may choose to cancel the purchase contract. Work closely with your lender to ensure that all necessary paperwork is completed in a timely manner.
- Review the title report. The seller must provide marketable title, which means that there are no legal issues regarding your ownership of the property. Review the title report with an attorney or title officer to ensure that there are no outstanding liens or other issues that may impact your ownership.
- Obtain homeowner's insurance. Homeowner's insurance will likely be required before you can close the sale. Make sure to apply for insurance as soon as possible after the contract is signed, as obtaining this insurance may require a lengthy period of time.
- Schedule utility services. Contact local utility companies to schedule the transfer of services to your name when you close escrow.
- Complete a final walk-through inspection. Schedule a final walk-through inspection to ensure that the property is exactly as the contract says it should be. Check that all fixtures and appliances are in working order, and that any agreed-upon repairs have been completed.
By following these tips and working closely with your real estate agent, lender, and escrow or settlement company, you can ensure a smooth and successful home purchase experience. Congratulations on becoming a homeowner!