When most people think of buying a house, the first thing that comes to mind is the mortgage. How will you afford it? How much can you borrow? What is the likely interest rate? Can you find an affordable property? These are all important questions to be considered.
Despite inflation, high mortgage rates, and the newly declared recession-lite phase of the economy, the housing market remains hot. At MY SMART COUSIN, we work with aspiring real estate investors and homeowners, and particularly Black and Brown folks and women, to help you find properties that fit your needs! As your Real Estate Investment Coach, we will walk you through evaluating the current property landscape and develop a custom-tailored plan on how best to invest your money and buy a house for the price of a car.
One element of purchasing a property is the escrow process. While this process can seem daunting, it doesn’t have to be. This guide will walk you through the key steps, from start to finish. So whether you’re a first-time homebuyer or an experienced pro, read on for all the info you need.
WHAT IS AN ‘ESCROW’ AND WHAT DOES IT INVOLVE?
Escrow is a system where two parties involved in a transaction (usually a buyer and seller) deposit all funds and property related to the transaction with a non-related third party. This third party holds the funds and assets until all conditions of the deal are met before finally releasing them to the appropriate party. This process helps to ensure that both parties uphold their end of the bargain before any money or property changes hands.
In real estate transactions, for example, the buyer typically deposits funds with an escrow agent at the beginning of the sale process. Once all contingencies are met and both parties are satisfied, the escrow company will release the funds to the seller.
Escrow can also involve other assets besides money, such as intellectual property or physical belongings. By entrusting these items to a third party, both parties can be sure that they will receive what they are owed promptly.
HOW TO PREPARE FOR THE ESCROW PROCESS?
The escrow process can be confusing and overwhelming, but it doesn’t have to be. Here are a few tips to help you prepare for escrow:
· First, be sure to choose a reputable escrow company. Ask for recommendations from your real estate agent, attorney, or financial advisor.
· Second, make sure you have all of your documents in order. This includes your purchase contract, loan papers, and any other pertinent paperwork.
· Third, be prepared to pay any necessary fees. This may include an escrow fee, loan origination fee, and/or title insurance premium.
· Fourth, be patient! The escrow process can take several weeks to complete. But once it’s finished, you’ll be the proud owner of your new home.
WHAT TO DO DURING THE ESCROW PROCESS?
Once you’ve found a home you want to purchase and made an offer that’s been accepted by the seller, it’s time to enter escrow. Escrow is the period between when your offer on a home is accepted and when the sale finally closes and you become the legal owner. During this time, your real estate agent will be working hard behind the scenes to make sure everything goes smoothly. Here’s what you can expect during the escrow process:
1. Your agent will order a title search to make sure there are no outstanding claims or liens on the property.
2. The lender will order a home appraisal to make sure the property is worth at least as much as the loan amount.
3. You’ll need to get insurance for the property.
4. The escrow company will prepare all the necessary paperwork for the closing.
5. You’ll need to sign all the paperwork and wire the down payment and closing costs to the escrow company.
6. The seller will transfer the deed to you and you’ll be given the keys to your new home!
WHAT TO DO AFTER THE ESCROW PROCESS IS COMPLETE?
So you’ve finally made it to the end of the escrow process. Congrats! You’re now the proud owner of a new home. But what comes next? Here are a few things to keep in mind in the days and weeks following the close of escrow:
· Pat yourself on the back – you’ve just accomplished one of the biggest milestones in your life! Make sure to celebrate accordingly.
· Get in touch with your homeowner’s insurance company and set up coverage for your new home.
· Start thinking about any customizations or renovations you might want to make to your new place. A little bit of planning now will save you a lot of headaches down the road.
· If you’re moving from out of state, start researching local schools and amenities so you can hit the ground running when you arrive.
· Most importantly, take some time to relax and enjoy your new home. You’ve earned it.
SUMMING IT UP
So, there you have it! Your comprehensive homebuyers guide to the escrow process. Escrow may seem challenging at first glance, but with our helpful tips and a little preparation, you’ll be ready to take on this important step in the homebuying journey. Are you excited? We certainly are! If you have any questions about escrow or would like more information, don’t hesitate to reach out to us. We’re always happy to help. Until next time, happy house hunting!
YOU CAN ALSO READ: HOW TO ESTIMATE YOUR RENTAL PROPERTY EXPENSES
FOLLOW US: @MYSMARTCOUSIN