There’s a lot involved in buying a house, whether you’re purchasing a home with a previous owner or you’re purchasing new construction by home builders in Warner Robins, GA. One such process that confuses many homebuyers is the escrow process. This takes place the moment the seller accepts your offer until you receive the keys. It serves to protect both you and the seller’s financial interests. Let’s go through this process in detail:
Opening the escrow account
Upon finding the perfect home and signing the purchase agreement, your real estate agent will collect your earnest money (a good faith deposit that becomes part of your down payment). This is deposited into an escrow account, which is managed by a neutral third party. In addition to holding money, the escrow account will also hold all necessary documents, including loan documents and the deed.
Home appraisal and financing
Prior to getting your mortgage, your lender will appraise the home to see if it, indeed, is worth the mortgage you’re applying for. If appraisal results show that the house is worth less than its selling price, the lender can opt not to provide financing. You can get another lender to do an appraisal, offer to pay for the difference, or try to convince the bank that the home is worth more. But if the house is appraised at the same, or a higher, price as the sale price, then you can secure your mortgage.
Next, the seller should provide you with a written document stating the home’s various flaws. This makes you fully aware of problems the house currently has.
Never skip the step of home inspection. This is necessary to thresh out issueswith the home that the seller and their agent may or may not know of. Aninspector will make a full sweep of the house then make a report of theirfindings. From there, you can either negotiate for the seller to fix issues found bythe home inspector or leave the negotiation table altogether if the issues are simply too overwhelming for you.
There are some home insurances that are required of a buyer, depending on the home’s location. You will be made to secure homeowner’s insurance until you’re fully paid with your mortgage. For waterfront homes or homes in flood-prone areas, flood insurance is a necessity, too. There’s also the title report and title insurance to secure. The title report assures you that no one else but you can lay claim to it. Title insurance, meanwhile, frees you and your lender from hidden legal issues that the seller should have attended to.
Contingency removal and final walk-through
By the time you get to this part of the process, contingencies have been settled and you’re beyond walking out of the real estate deal. The final walk-through will give you one last opportunity to go through the entire property to make sure that no new issues have developed and that items agreed upon in the purchase agreement are in place.
Review the HUD-1 Form then close the deal
Before your closing, you will receive a HUD-1 Form. This document shows your loan terms and closing costs. It should also look almost identical to your good faith estimate. Compare the two documents and check for mistakes.
As you reach the closing of your deal, you and the seller will sign several documents in front of a notary and have the utilities changed over to your name. The keys will be turned over and the house will be yours.
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