Things To Remember In Escrow
With record-low mortgage interest rates and growing inventory, this summer is a great time to buy a home. But as you may have heard, this process is complicated: financially, emotionally, and in almost every other sense.
In fact, buying a home requires having everything in order before you can close the sale.
After having your offer accepted and before getting the keys, you will be in “Escrow”. This means that your money and personal information is held by third parties operating between you and the seller. While this period usually lasts just 30 days, delays are common.
To keep things moving along, we recommend that you are mindful of the following considerations:
Within seven days of opening Escrow, sellers must complete and return the Statement of Identity to Escrow. (This document allows lenders to check for any undisclosed liens, judgements, bankruptcies, etc. in your personal file.) As a buyer, you must do the same only if this is required by the title company.
One or two business days before closing, you will have to sign at the Escrow company. You must have valid photo ID with you at signing, such as:
- Driver’s License
- State-issued ID
You may still owe payment at the close of Escrow. If so, please bring a cashier’s check to signing or complete a wire transfer at least 24 hours beforehand.
Communicating clearly with your agent (and lender) during Escrow helps avoid unnecessary mishaps. As your agents, we are always happy to answer any questions you may have; whether about the process, your new property, or any other concerns you may have. It’s important that we maintain an open dialogue until the sale closes. And if you wish to see the new property, we would be happy to help you schedule an appointment!
3) PERSONAL FINANCES
Because of the financial significance of buying a new property, your lender will not want to see any other large expenses or changes to your credit during Escrow. If someone runs your credit, the lender will be notified and your loan will likely be placed on hold. Any new credit cards or loans could affect your credit score and/or debt-to-income ratio, which would jeopardize your loan. As a result, we encourage you to hold off on significant purchases or credit-changing decisions after you close. (These include applying for, co-signing, or opening new lines of credit, as well as closing or consolidating any accounts.)
4) EMPLOYMENT STATUS
Most lenders verify your employment status before funding your mortgage. Please ensure all information you have provided to your lender is correct, including contact information for your company’s HR representative. And not surprisingly, you should also let us know as soon as possible about any upcoming job changes.
5) TRAVEL PLANS
If possible, you should remain in town at all times during Escrow. If you must travel, you will need to establish a Power of Attorney (POA) and provide a copy of the POA to your lender and the title company for approval. Please let us know about any possible travel during this time.
6) NEW HOMEOWNER OBLIGATIONS
You will want to have your homeowner’s insurance policy in place before moving into the new property. To ensure that evidence of insurance has been received, contact your insurance company and follow up with your escrow officer.
Also, if your new property is a condominium or part of a planned unit development, you will require certification by the Homeowner’s Association (HOA). Before closing, the title company will have to request your certificate from the HOA board. This often requires a fee to process, and can take two weeks or longer. As such, we recommend you get started at the beginning of Escrow.
7) OTHER CONSIDERATIONS
Here are a few additional considerations to weigh while in Escrow:
- Escrow Terms: We will provide a completed terms sheet to the escrow officer at the start of Escrow. This helps us avoid any miscommunications or delays regarding Terms of Escrow between all parties.
- Holding Title: There are different ways of holding title. An attorney can provide more information on different vesting options and help you decide what best meets your needs. If you prefer to take title in your trust, you must provide your Certificate of Trust to the escrow officer.
- Contract Changes: If changes are made to the contract during Escrow (such as any repair work completed before closing), be sure to provide all contract changes to both your lender and escrow officer as soon as possible. Unknown and unexpected changes to the purchase agreement can delay closing.