Escrow: Now What?
Congratulations, you are on your way to owning your very own home in Tampa Bay FL! Follow these suggestions (and, of course, our advice) so that escrow and closing go as smooth as possible.
So what is escrow? Escrow is a legal arrangement when you are purchasing a home in which a third party (title company) temporarily holds money until a purchase agreement is met. You will be asked for a down payment on the home you are purchasing. You can choose to put down as much or as little as you want (depending on your mortgage), but remember, the more you put down toward the total price of your home, the less time it will take you to pay off and the less your mortgage payments will be every month. During this period of the buying process the title company will hold your down payment (deposit) and coordinate much of the activity that goes on during this part of the buying phase. The title company will hold that down payment until they the paperwork is complete to give your money to the sellers and get the deed to your new home. Make sure that there are sufficient funds in your account to cover this check.
The deposit check will be cashed. Assuming the sale goes through, this money will be applied to the purchase price of the home. If for any reason the sale is not completed, you may be entitled to receive all of your deposit back, less standard cancellation fees. In certain instances, the seller may be able to retain this money. Prior to executing a purchase contract, we will advise you regarding whether or not it is your best interest to have a liquidated damages clause as part of the contract.
1. The period that you are "in escrow" is often 30 days, but may be longer or shorter. During this time, each item specified in the contract must be completed satisfactorily. By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. Each contract is different, but most include an inspection contingency which should be completed as soon as possible after the contract is signed as unsatisfactory results of the inspection may mean that you will want to cancel the contract. There is also a financing contingency. Once the contract is signed, you have a period of time to secure funding. If, for any reason, 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 remove the contingency and take your chances on getting a loan. You may choose to cancel the purchase contract.
2. A requirement that the seller must provide marketable title. The title company will review the title report. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. The title company will also know local and state ordinances regarding property transfer and make sure that you and/or the seller have complied with them.
3. Secure homeowner's insurance. This will probably be required before you can close the sale. It would be in your best interest to apply for insurance as soon as possible after the contract is signed.
4. Contact local utility companies to schedule to have service turned on when you close escrow.
5. Schedule the final walk-through inspection. At this time, you should make sure that the property is exactly as the contract says it should be. What you thought to be a "permanently attached" chandelier that would come with the property might have been removed by the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner of a new home. Congratulations!