| Frequently
Asked Questions |
| A
Step-By-Step Guide for Buying a Home |
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Opening Escrow...what exactly is an escrow?
An escrow is an independent “stakeholder” account
and is the vehicle by which the interests of all parties to the
transaction are protected. Your escrow is created shortly after
you execute your contract to purchase your home. The escrow becomes
the depository for all monies, instructions and documents pertaining
to the purchase of your home.
Some aspects of the purchase are not part of the escrow. For example,
the buyer and the seller must decide which fixtures or personal
property items are included in the purchase. Similarly, loan negotiations
are between the buyer and the lender. Your real estate agent can
guide you in these non-escrow matters.
How does the escrow process work?
The escrow is a depository for all monies, instructions and documents
necessary for the purchase of your home, including your funds
for the down payment and your lender’s funds and documents
for the new loan. The escrow officer takes instructions based
on the terms of your purchase agreement and your lender’s
requirements. The escrow officer can hold inspection reports and
bills for work performed as required by your purchase agreement.
Other elements of the escrow include hazard insurance, title insurance
and the grant deed from the seller to you. Escrow cannot be completed
until the instructions (requirements) have been satisfied, and
all parties have signed escrow documents.
How do I open an escrow?
Your real estate agent will open the escrow for you. As soon as
you execute your purchase agreement, your agent will place your
initial deposit into the real estate broker’s trust account.
How will I know where my money has gone?
Written evidence of your deposit is generally included in your
copy of your purchase contract. Your funds will then be deposited
in your separate escrow or trust account and processed through
your local bank.
What information will I have to provide?
You may be asked to complete a statement of identity as part of
the necessary paperwork. Because many people have the same name,
the statement of identity is used to identify the specific person
in the transaction through such information as date of birth,
social security number, etc. This information is kept confidential.
How long is the escrow?
The length of an escrow is determined by the terms of the purchase
agreement and can range from a few days to several months. An
escrow often takes an average time of 30 to 45 days. Now that
you have selected your home, executed your purchase agreement,
made your purchase deposit and an escrow has been opened your
next step is to apply for a mortgage loan. Your real estate agent
will be able to assist you in selecting a lender.
How does the loan process work?
Your real estate agent can provide you with current financing
information to help you in selecting a lender. The lender might
be a bank, savings and loan or mortgage company. You will be required
to complete a loan application which will require personal and
financial information.
What happens after I submit the loan application?
The lender will begin the qualification process including verification
of information submitted on the application and appraisal for
the value of the property. The lender will require that you obtain
hazard/fire insurance if you are purchasing a detached home. However,
if you are buying a condominium, there may already be a master
hazard policy. Check with your real estate agent on this. Also,
check with your insurance agent for additional coverage for your
personal property. The lender will also require that you obtain
title insurance and may have other requirements that will need
your attention prior to the close of escrow. Your real estate
agent can help you take care of these requirements well in advance.
Escrow Instructions...what are escrow instructions?
Escrow instructions define all the conditions that must occur
before the transaction can be finalized. Your escrow instructions
specify, in a debit and credit format, the disposition of your
purchase funds. They also provide for title protection for your
home.
When do I sign escrow instructions and where do I do this?
Your escrow officer or real estate agent will contact you to make
an appointment for you to sign your escrow instructions and final
loan papers. At this time, the escrow officer will also tell you
the amount of money you will need (in addition to your loan funds)
to purchase your new home. Your loan funds will be sent directly
to the escrow by the lender. You may sign your escrow instructions
and loan documents at the title company's office, your real estate
agent’s office or some other location agreed upon by all
parties.
What do I need to do before my appointment to sign the
escrow papers?
Lender’s Requirements
Make sure you are aware of your lender’s requirements and
that you have satisfied those requirements before you come to
the title company to sign your papers. Your loan officer or real
estate agent can assist you.
Hazard/Fire Insurance
If you are purchasing a single family, detached home (or in some
cases, a townhouse), be sure to order your hazard/fire insurance
once your loan has been approved. Then call your escrow officer
with the insurance agent’s name and phone number so that
he or she can make sure the policy complies with your lender’s
requirements. You must have your insurance in place before the
lender will send money to the title company. If you do not have
an insurance agent, your real estate agent can help you.
Identification
Please bring either your valid driver’s license or passport
with you to the title company. This is needed so that your identity
can be verified by a notary public. It’s routine, but a
necessary step for your protection.
Title to Home
Decide how you wish to hold title to your new home. You will need
to make this decision prior to your escrow appointment. We suggest
you consult a lawyer, tax consultant or other qualified professional
before you decide. Merely bring your decision on this matter to
your escrow sign-off appointment.
What’s the next step after I’ve completed
my sign-off?
After you have signed all the necessary instructions and documents,
the escrow officer will return them to the lender for a final
review. This review usually occurs within a few days and upon
completion, the lender is ready to fund your loan and advises
the escrow officer.
What is an “escrow closing?”
It signifies legal transfer of title from the seller to the buyer.
It’s the culmination of the transaction. Usually the Grant
Deed and Deed of Trust are recorded within one working day of
the escrow’s receipt of loan funds. This completes the transaction
and signifies the “close of escrow.” Once all the
conditions of the escrow have been satisfied, the escrow officer
advises you the date the escrow will close and takes care of the
technical and financial details.
When will I receive the deed?
The original deed to your home will be mailed directly to you
at your new home by the County Recorder’s office. This usually
takes several weeks, sometimes longer, depending on their volume.
Helpful Reminders
* Make sure you are aware of your lender’s requirements
and that you have satisfied those requirements before you come
to the title company to sign your papers.
* After confirming with your real estate agent, be sure to order
your hazard/fire insurance once your loan has been approved. Then
call or be sure your real estate agent calls your escrow officer
with the insurance agent’s name and phone number. You must
have your insurance in place before your lender will send the
closing funds to the title company. If you don’t have an
insurance agent, your real estate agent can help.
* You’ll need to bring a cashier’s check or certified
check to the title company for the remainder of the purchase price.
Either type of check should be from a California bank or a savings
and loan. Get the exact amount of the balance due from your escrow
officer by telephone before your appointment for signing the papers.
The check should be made payable to the title company.
* In the event that you wish to transfer funds from another escrow
or wire transfer funds, arrangements must be made in advance with
the escrow officer.
* In the event that you wish to use a power of attorney, arrangements
must be made one or two weeks in advance with the escrow officer,
and the power of attorney must be approved by your lender.
* Please bring either your valid driver’s license or passport
with you to the title company. This is needed so that your identity
can be verified by the notary public. It’s routine, but
a necessary step for your protection.
* Decide how you wish to hold title to your new home. You need
to make this decision prior to your escrow appointment. We suggest
you consult a lawyer, tax consultant or other qualified professional
before you decide.
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| Frequently
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