You are hereWe got our offer accepted!

We got our offer accepted!


Congratulations!  Don’t relax yet because there are still many things to be done but you’ve done the majority of the work.  If you’ve never been thru the escrow process then brace yourself because many things can come up that may make you wonder why you ever decided to buy a residence to begin with.  Let’s start with a little understanding of what escrow really is.  Escrow is a legal process by which assets are transferred from one party to the next.  The primary thing you need to remember about escrow is that it’s there to protect you.  As the  home loan process has gotten to be so involved, an escrow holder is charged with collecting assets until every participant in the contract has been fulfilled by both parties as per the Purchase Agreement.  Upon fulfillment of the terms of the contract the escrow holder distributes the assets to participating parties as agreed.  The level of communications a buyer is going to receive will vary from provider to provider but here are some of the duties of an escrow officer.

Communications  Depending on the way the escrow office works, the assigned escrow officer might get ahold of you to introduce themselves and also to ask for pertinent information if needed.  The escrow officer serve as an integral communication link to all parties in the transaction. first time home buyer

Execution of contract prepares and complies with escrow instructions from the mutual direction of the principals.  Requests a title search from the designated title company to determine what title issues will need to be addressed before title can transfer to Buyer as well as asking for statements from any existing lender or lien holder based on the directions of the Seller. 

Impartiality  The escrow officer is not there to advise you as to whether or not the deal is good. They will simply execute the escrow terms as described to them which includes the following; 

  • Complying with the lender's requirements as specified in the escrow instructions.
  • Calculating the final monies which the Buyer will need to bring in to close escrow.
  • Requesting the monies to close from the Buyer.
  • Securing releases of the contingencies and conditions as stated in the escrow instructions.

 

  • Interpret the escrow instructions to verify all conditions have been met and all funds required have been received into escrow.   If all is in order, the loan funding is requested and recording of the transfer documents is authorized.
  • After the loan if funded, escrow receives confirmation the recording has taken place and calculates the escrow file for prorations, payoffs, buyer and seller charges and escrow/title fees.
  • Upon verification of recording, escrow disburses all funds that have been deposited into escrow based on the terms of those escrow instructions.
  • Prepares the final statement accounting for all funds received into and disbursed from escrow and issues difference checks.

 

The reason you need to know the functions of escrow are because at this point that is the primary party doing your purchase and will act as the conduit for your transaction.  You may be getting calls from time to time from your Realtor, Loan Officer and what is called a Transaction Coordinator who normally works for your Realtor but the real work is being done by Escrow.  When an involved party does call and ask for information or supporting documents, you want to respond as expeditiously and accurately as possible.  Delays or hold-ups can cost you time and money. 

Now with your approval and your accepted offer, there are a couple of things to not do. First thing is minimize the number of inquiries by creditors particularly car dealerships.  And the other thing is do not make any major purchases on credit you already have established.  On more than one occasion a person has gone out and made a major purchase only to lose their loan because that purchase threw their debt-to-income ratio out of balance so they no longer qualified so be careful.  A loan approval is good at the time it is written.  Should any inquiries or purchases show up to the lender after the approval, they can still refuse the loan so just a word to the wise, resist the temptation and wait! 

During this period you will also have some other things you will need to do. Before a property can close escrow you will need to have Hazard Insurance.  When you buy a house that insurance is going to protect your house from fire, theft, and other hazards.  Contact your insurance agent for more details.  One thing to consider when shopping for insurance is that many of the major insurance carriers will give you what they call multi-line discounts.  What that means is that if you place your auto insurance with the provider who will give you the Hazard Insurance, in many cases you will not only get a discount on that insurance but also a discount on your autos so I would recommend shopping both your auto and Hazard at the same time and not that you’ll be obligated but placing both with the same carrier might save you money over just one or the other.  Like looking for a Loan Officer, you will also want to quiz and interview any potential insurance agents because most people don’t know how good their insurance is until they have a claim and at that point it is a little late to change.  Needless to say insurance is a vital part of home ownership.  Now once you’ve decided on a carrier they will need to be put in touch with escrow because they will set the timing as to effective dates and also verify coverages and loss-payees so please take this seriously. 

Another thing that people sometimes don’t think about is timing.  If you are close to signing documents for the loan you need to be available because documents normally have an expiration date and remember in California that documents signed on a purchase have no right of recession period.  That is not true on a refinance which has a 72 hour right.  So if you plan a vacation during your escrow period you should always communicate with your Realtor, Loan Officer, and the escrow officer because there might be some urgent business to be handled and being able to reach you could be very essential.  The best plan is to stay around and be accessible.  With regards to accessibility I’ve seen a situation that is worth talking about and that is an absentee buyer.  The classic scenario is one where a husband and wife are purchasing a house and the husband who is in the military is on deployment and of course not an active participant in the transaction.  The transaction can be done via a Power of Attorney.  A little more difficult but still possible and is probably done fairly often.  If you have any questions, please contact me.  Now summing up this section just remember that the transaction is basically proceeding as it should but your involvement is still required and the main thing is don’t hesitate to ask questions from anybody involved in your purchase.  This is one of the biggest purchases you’ll ever make(at least until you trade-up into a more expensive house).