The escrow company is a neutral third party responsible for preparing documents necessary to transfer clear title to the buyer, recording the mortgage and making sure funds are transferred to the seller. The escrow process begins when your earnest money is deposited and the purchase and sale agreement is delivered to the escrow company, and ends with the closing of the transaction.
The escrow company is a neutral third party responsible for preparing documents necessary to transfer clear title to the buyer, recording the mortgage and making sure funds are transferred to the seller. The escrow process begins when your earnest money is deposited and the purchase and sale agreement is delivered to the escrow company, and ends with the closing of the transaction.Traditionally buyers choose the escrow company but it is often negotiated. Real Estate Brokers have years of experience with escrow companies and they know which ones perform well. Because of this they often have excellent recommendations.
Escrow manages the transaction behind the scenes. They gather all the information for the selling and buying parties, review title, make contact with the lender and work closely with them to make sure the lender documents are on schedule for a signing appointment that will need to happen a few days before closing.
Escrow will send you documents in the mail; remember as your Purchase and Sale agreement states, “time is of the essence!” Do not delay opening your mail and be sure to promptly return any forms or information they may need.
Escrow provides your settlement statement and makes it available a few days before closing. Your settlement statement (or “HUD1”) is a summary of the costs of your transaction. Look it over to make sure the loan costs are the same as your Good Faith Estimate you received from your lender. Make sure that all other costs appear accurate.Escrow will let you know the exact amount of money they will need from you to close the transaction. You can bring a cashier’s check or wire transfer the money.
Helpful hint: if you are relying on stocks or other assets for the money, make sure they are liquidated well in advance.
What you need to know about title insurance
As a buyer, you want to know the home you’re purchasing will be yours, free and clear
of liens, unpaid taxes or claims of ownership. Your lender wants the same assurance, to
know that the property is legitimately and legally the seller’s to sell. So before closing a title
company is hired to scrutinize a raft of public records – such as liens, claims, deeds, wills,
trusts, tax records and maps – to make sure there are no problems in the title’s ownership
and history for the property you want to buy. If a title search uncovers any problems, you
can deal with them before you close on the property. In the event something is missed and
a dispute over property ownership occurs after closing, title insurance protects you and
your lender from loss.
There are two types of title insurance:
• Owner insurance protects you, the buyer, from issues that might crop up after
closing. Examples such as human error, forged documents, undisclosed or
missing heirs, etc. An owner’s policy protects you by making the insurance
company liable for most claims against your ownership. Title insurance is a
one-time, up-front investment that insures you for as long as you own the
property; fee is based on the purchase price of your house. The policy takes
effect on the date it is issued and is one of the itemized costs your lender will
include at closing.
• Lender insurance protects your lender – and only your lender, not you – against
any loss due to unknown title defects. It also guarantees the lender a valid first
lien against the property.
The only time to buy title insurance is at closing. Read your policy carefully and make sure
you know exactly what is covered and what is not; ask questions about anything you don’t
understand. Then be sure to keep your policy handy and in a safe place.
What you need to know about homeowner’s insurance
A house is a major investment – perhaps the biggest one you’re ever made. Because
it is, you’ll want to insure it. Guess what? Your lender wants that too. In fact, one of the
conditions of your mortgage is getting homeowner’s insurance, also known as hazard
insurance. At closing you’ll need to show proof of having homeowner’s insurance and that
a year’s premium has been paid. Without this proof your loan won’t close.
Why insurance? Your lender wants to protect his or her interest in your property if
catastrophe or other damage occurs. For example, if your home is destroyed by fire, the
lender knows the mortgage will be repaid from the proceeds of the insurance. As the
home’s owner you’ll want to insure it and its contents, as well as protect yourself against a
lawsuit if someone is hurt or injured on your property.
The kind of insurance you need will depend on where you live (do you need flood,
earthquake, wildfire or hurricane protection?) and what you own (do you need to cover
cherished family jewelry? antique cars? a comic book collection?). Ask friends and family
for insurance company referrals and research online resources to learn tips to save on your
policy.
Closing
You will be visiting the escrow office to sign the closing documents (these “documents” are your loan documents”), and some mortgage brokers offer to be there with you at signing since these documents originate with them. Signing appointments are usually scheduled 2-3 days before closing and take 1-2 hours.
Helpful hint: bring your driver’s license so your signatures can be notarized.
Escrow and/or your agent will call you once your transaction has been officially recorded on the day of closing. Then you get the keys for your new home!
