Escrow: Now What?
Once your offer is accepted by the seller it starts the "escrow period". You will be asked to make an initial deposit. (This is NOT your "Down Payment") This "Escrow Deposit" typically is about 1% of the purchase price on the home you are purchasing. This deposit will be held with an attorney or settlement company and applied to the final purchase of your property. Additionally there can be a second, more substantial deposit required.
By the time you have opened escrow, you have come to an agreement with the seller on the closing date and other contingencies. The escrow period is usually 30-45 days and each item specified in the contract must be completed satisfactorily.
Each contract is different, but most include the following four items:
Inspection contingency: this should be completed as soon as possible after the contract is signed. Typically within 7-10 days. If the results of the inspection are unsatisfactory you can negotiate repairs or cancel the contract.
Financing contingency: Once the contract is signed, you have a period of time to secure funding and produce a "clear to close" (CTC). If you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to cancel the purchase. This is why being pre-approved before shopping for a property is so important!
There is also a requirement that the seller must provide a marketable title. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. We can help you look into local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
Secure homeowner's insurance. This is almost always required before you can close the sale. In fact, if you're obtaining a mortgage...Homeowners insurance is REQUIRED. It best to apply for insurance as soon as possible after the contract is signed.