The escrow process can prove quite tedious and confusing for both sellers and buyers. The escrow company or agent is responsible for handling the details of the purchase, money, instructions and paperwork to protect the both parties involved. Whether you are a buyer or a seller, you want to speed up your escrow because the longer the escrow takes, the higher the chance for problems.
WHAT IS ESCROW?
An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.
The time it takes to go from the beginning to the end of the escrow process varies. Some of the factors determining the length of the closing include a mortgage pre-approval, having the proper documents on hand, and the amount of time it takes to get the underwriting complete. And just like the length of time, the process can also vary by state. The steps, however, are generally the same for everyone.
Following are 6 tips you should follow to speed up your escrow:
1. Get Approved First
All too often, buyers have their heart set on a particular home and make an offer without securing full approval from a lender. It is recommended to obtain preapproval from your lender before you make an offer and open escrow to avoid delays or the deal falling apart completely. Getting approval and knowing how much you can actually offer on a home will save a lot of heartache in the long run.
2. Keep Communication Ongoing
A real estate transaction is a negotiation between a buyer and a seller who must communicate effectively to complete a deal. Throughout the entire process, buyers and sellers should stay local and remain in touch with the real estate agent, escrow officer and anyone else who is important to the transaction. You may need to be available at a moment’s notice to provide important documentation or deal with unexpected hurdles that come up.
3. Have Inspections Scheduled
Escrow is often delayed by missing inspection reports. Make sure you are ready to sign paperwork and arrange for any home inspections such as the general inspection, termite inspection, and roof inspection. The escrow officer will need these inspection reports to speed up the closing process and make sure all contingencies have been met. If the agent or inspector cannot reach you for an appointment, closing may be delayed.
- Home Inspection
You are not required to obtain a home inspection when you purchase a home, but it is in your best interest to do so. A professional home inspector will tell you if there are any dangerous or costly defects in the home. You need to know about any problems so you can back out of the deal, ask the seller to fix them or ask the seller to lower the price to handle the repairs yourself.
- Pest Inspection
You may want to get a pest inspection to ensure the house does not have termites, carpenter ants or other pests such as roaches or rats. These problems may not be apparent during the day when you have most likely viewed the house. Any pest problems will need to be rectified before the sale can proceed, assuming you want to continue with the purchase. This is another area where you may want to renegotiate with the seller to pay for the work.
- Environmental Inspection
It is sometimes recommended to get an environmental inspection to check for toxins in the home such as mold and asbestos. There can also be problems on the home site like contamination from a location near a landfill, former oil field, dry cleaner, gas station or other environmentally hazardous business. Any problems uncovered in this area can mean serious health hazards and may be expensive to fix.
4. Supply All Necessary Documents
You may receive instructions from the real estate agent, lender, or escrow officer at any time during escrow. Failing to supply necessary documents to the lender can delay processing of your mortgage agreement and escrow. Your escrow officer or agent may also have instructions or questions.
It is common for lenders to request two years of federal income tax returns to support a loan approval if you’re self-employed, on commission, or receive your income from investments. Otherwise, you may just need a recent pay stub and a couple of W-2s. Since you know you will need these documents as part of your loan approval, compile them in advance. This helps you close your mortgage faster.
5. Be Prepared at Closing
Buyers have a few days to review final loan documents, but closing day can be demanding. Come prepared with any questions you have, a calculator and an agent who will help you. The real estate agent is usually responsible for helping you make sure the deal closes properly.
By law, your lender has to send you a “closing disclosure” at least three days before your closing date. This document will include the terms of your loan and the final numbers for any closing costs you will owe. Review this document to confirm that all the details are accurate and as you expected. Write down any questions you have and bring them to the closing (or consult with your agent or attorney beforehand). If you will owe money at the closing, make sure you plan ahead to get a cashier’s check or have a wire transfer done. Personal checks are not accepted.
6. Choose an Experienced Escrow Company
Escrow is a relationship business. Your broker will typically recommend an escrow officer with whom he or she has a history of successful transactions. Important factors to consider are the level of experience of the individual who will be acting as the escrow officer, the financial strength and stability of the company and the price charged for escrow services. Consider finding an office conveniently located near you to save time.
Keep in mind, title and escrow services do not dictate fees related to the home loan. While all fees (title, escrow, lender and more) show up on the Final Closing Disclosure or Final Settlement Statement, lender fees will be generated by the lender. Escrow is responsible for the Escrow fees only.
WHY CHOOSE CITRUS HERITAGE ESCROW?
When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, you have gained the maximum benefit from your home sale or purchase.
Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200