Buying a home can just be as daunting as it can be an exciting time for families. Knowing how to go about with the home buying process will help ease some of the stress. Part of this process is where you go into escrow.
I have condensed the steps to buying a house here to show where escrow fits in the big picture. Here, you will also understand the importance of escrow in real estate.
Research and research
The importance of doing research before hurdling a milestone cannot be emphasized more. And since buying a home is considered a major milestone in anyone’s life, yes, do the research.
Learn about the real estate market you are shopping in and the type of property that will fit your needs and lifestyle. Take a look at reports, consult with your real estate agent, check out what others are saying online – what you can learn from these sources are endless. Information you get from your research will allow you to properly outline your “battle plan” to get the home you truly deserve.
What can you afford?
The next logical step after looking for information on the best home for you is to look within…your pockets. Ask that million-dollar question: How much house can you afford?
To answer that question, get a mortgage pre-approval. This gives you a good idea of how much you will be able to spend on a home. It is also your proof that you actually have something in your pockets for the home purchase. Plus, it will give you better leverage with home sellers, compared to others without a pre-approval. You can narrow down your options at this time to the ones that make financial sense.
Real estate help
By the time you reach this point, you should consider getting a real estate agent to help you with your search. A good real estate agent will provide you with crucial information about homes and neighborhoods – information that’s not easily accessible to you. These experts are familiar with the area you are eyeing as your next neighborhood; they may even know the history of the home you are looking at. Know this fact: your estate agent will be your strongest ally in the home buying process.
Inspect the home
No matter how excited you are to purchase your new home, first have it inspected by a professional. This home inspector can help you see if there is any damage to the house that is not immediately visible or that could affect you in the long run.
After a thorough inspection, this expert will send you a report stating all issues discovered in the home from simple leaks to major structural issues. These discoveries could be raised in the home negotiation. Based on the extent of repairs needed, you can haggle for a discount from the home seller or let the seller finance the repairs prior to closing the deal on the sale. Or you can walk away from the negotiation totally and seek other home options.
Escrow is a term you should be familiar with as someone looking to purchase a home. This is the period before the sale of a home is completed. It all begins with the seller’s acceptance of your offer.
As the paperwork is being sorted out, the house is placed “in escrow.” During this time, a new set of gears are set into motion. These include:
- Processing of mortgage application;
- Purchase of homeowner’s insurance;
- The title search; and
- Your own preparation for the move.
Items that are held in escrow while the home is being purchased include the deposit you paid to the seller, the deed document that transfers ownership of the house to you, and the loan proceeds. An independent licensed third party comes in the picture to hold all of this, often an escrow agent. Once the sale is finalized, everything is released.
Close the sale
After signing all the paperwork, waiting for the transfer of funds to the seller, and all other last details, you can then move into your new home.
Tedious as the home buying process may be, with patience and knowledge, it can be quite rewarding. Imagine that: a major milestone concluded, and all your hard work finally pays off at this point.
More about escrow accounts
Escrow accounts allow homeowners to pay critical aspects of their home, such as property taxes, without taking on the full load at the end of the year. A certain amount from the mortgage payment fills the escrow account. The agent handling this will use the said amount to pay property taxes and homeowner’s insurance premiums to keep payments up-to-date.
The importance of understanding how escrow works cannot be ignored. If you want to learn more on how this concept plays in your home buying process, as well as real estate options in the areas of Pierce County, Thurston, and King County, get in touch with us, the Lewandowski Group, at 253-617-5922. You can also send us an email at LoriLewandowski(at)Gmail(dotted)com. Our team can assure you of a smooth-sailing real estate transaction.