Unsure what escrow is? Don’t worry, we’ve got your covered.
For many people, escrow is something of a mystery. It’s common for people to ask what escrow entails, how long the process takes, and what they can expect. Well, it’s time to clear up any confusion. Here’s the deal with escrow.
What is Escrow?
Escrow is when a third party holds the purchase contract and buyer funds for a home. This continues while an escrow agent checks to make sure both the buyer and seller have done everything necessary to finalize the sale. Escrow breaks down into three major phases: inspection, securing the mortgage, and closing. Each of these phases can be broken down into smaller steps.
Inspection Phase (after seller accepts offer)
- The buyer signs contract and escrow begins.
- The buyer deposits “earnest money” (money to confirm a contract) to hold the sale.
- The buyer reviews any flaws in the property and signs off on them.
- The buyer completes any inspections they want by the date specified in the contract and the inspector sends their findings to the buyer.
- The buyer asks for repairs or a reduction in the home’s price to compensate for any issues discovered by the inspector.
- The seller agrees to either make repairs or lower the home process for the sale to continue.
Securing the Mortgage (after inspections)
- The buyer’s mortgage company sends them estimate of closing costs.
- An appraiser conducts an appraisal of the property to verify the value of the home.
- Buyer’s mortgage lender approves the mortgage.
Closing (after buyer’s mortgage is approved)
- Both the buyer and seller attend meetings.
- The title company runs a title search to verify that there aren’t any issues.
- The buyer’s lender sends the last documents to the escrow agents.
- The buyer signs closing documents and pays the remaining down payments and closing costs.
- The escrow agent schedules the deed to be recorded at the County Recorder’s office.
- The escrow agent disburses all funds and the sale is deemed closed.
Hopefully, this step by step breakdown of the escrow process helped clear up any confusion you might have had. If you have any more questions regarding the escrow process, then the dedicated professionals at Eastland Escrows can help! Located in Covina, California, contact us today.