Sterling Escrow II
An Escrow Company that works as hard as you do to close your Real Estate Transaction efficiently and succesfully.
Once you and the seller agree on a price and sign a mutually acceptable purchase agreement, your real estate agent will collect your earnest money—sort of like a good faith deposit which is ultimately applied to your down payment—and deposit it in an escrow account at the escrow company or service specified in the purchase agreement.
The bank or other lender providing your mortgage will do its own appraisal of the property—which you, the buyer, usually pays for—to protect its financial interests in case it ever needs to foreclose on the property. If the appraisal comes in lower than the offered price, the lender will not give you financing unless you are willing to come up with cash for the difference or the seller lowers the price to the appraised amount.
You should have already been pre-approved for a mortgage at the time your purchase agreement was accepted. Once you give your lender the property address, it will prepare a good faith estimate or a statement detailing your loan amount, interest rate, closing costs, and other costs associated with the purchase. You may want to negotiate the numbers on this document before you sign it.
During this step, you should receive written notification of any obvious problems that have already been identified by the seller or the seller’s agent. For example, the garage may have been turned into a living area, in violation of city housing codes. You may already be aware of any problems like these because they’re often mentioned in the listing.
You aren’t required to obtain a home inspection when you purchase a home, but it’s in your best interest to do so. For a few hundred dollars, a professional home inspector will tell you if there are any dangerous or costly defects in the home. If there are, you’ll want to know about them so you can back out of the purchase, ask the seller to fix them, or ask the seller to lower the price so you can handle the repairs yourself.
This includes homeowner’s insurance and any extra coverage required in your geographic area such as flood insurance. You will be required to have homeowner’s insurance until your mortgage is paid off—and you’d probably want it, anyway. Choose your own insurance company, which may be different than the one the lender selects, and shop around to get the best rate.
These are also required by your lender, but again, you’d want them anyway. The title report makes sure the title to the property is clear—that is, that there are no liens on the property and no one else but the seller has a claim to any part of it.
Title insurance protects you and the lender from any legal challenges that could arise later if something didn’t show up during the title search.
It’s a good idea to re-inspect the property just before closing to make sure no new damage has occurred and that the seller has left you items specified in the purchase agreement such as appliances or fixtures. At this point in the process, you probably won’t be able to back out unless the home has sustained serious damage. However, it’s not unheard of for a petty buyer to pressure his or her agent to get the agreement nullified over something insignificant.
At least one day before closing, you will receive a HUD-1 form or the final statement of loan terms and closing costs.
Compare it to the good faith estimate you signed earlier. The two documents should be very similar. Look for unnecessary, unexpected or excessive fees as well as outright mistakes.
The closing process varies somewhat by state, but basically, you’ll need to sign a ton of paperwork, which you should take your time with and read carefully. The seller will have papers to sign as well. After all the papers are signed, the escrow officer will prepare a new deed naming you as the property’s owner and send it to the county recorder. You’ll submit a cashier’s check or arrange a wire transfer to meet the remaining down payment—some of which is covered by your earnest money—and closing costs, and your lender will wire your loan funds to escrow so the seller and, if applicable, the seller’s lender, can be paid.