1. What does it mean to be 'in escrow'?
In the home buying process, to be 'in escrow' means that a third party temporarily holds the buyer's earnest money until all the purchase agreement conditions have been met. Escrow happens after you have found the perfect home and the seller has accepted your offer.
2. What are the benefits of escrow?
The most significant benefit of an escrow account is the protection it offers all parties. As the buyer, your earnest money deposit is protected and can be refunded should the contract fall through at the fault of the seller.
3. How long does escrow last?
Typically escrow lasts between 30-60 days. However, this is not a set timeframe and can change depending on various factors and specifics of the transaction. Home inspections, appraisals, and other required tasks are often done during this time.
4. What can go wrong?
On the seller's side, the most common escrow problem is when there are conflicts with the seller's title- such as a lien, lawsuit, or questions about ownership. There can also be problems with the house that arise during the home inspection that are too expensive or complicated to fix. One of the benefits of buying a Sage new construction home is knowing that our homes are built by qualified and trusted contractors and are backed by our home warranty to cover any issues that may arise after you have moved in.
As the buyer, the most common problem is that your lending may fall through. It is imperative to make all of your payments on time and to avoid significant purchases (even if they are purchases for your new home) to keep your credit score and history in good standing. The lender will keep a close eye on your debt-to-income ratio and if this ratio changes, it may lead to issues with you qualifying for a mortgage.
5. How should I prepare for the Close of Escrow?
Once both parties have met the purchase agreement conditions, and your home is complete, it is time to close escrow. You may choose to do a final walkthrough of the property to orient yourself with the home and ensure that it has been constructed as you expected it to be. Just prior to closing, you will need to sign the closing documents. The seller, buyer, their agents, and the title company will need to sign the required documents, if financed, your loan will need to fund, and then you will close escrow. Welcome home!