If you are a first-time home buyer or seller, you will likely contact your real estate agent. Specifically, if you are home buying, he or she can send you properties to choose from. Buying a home, however, is not something that should be taken lightly. It is not simply making payments (down payment and monthly payments) until the total amount adds up to the agreed-upon purchase price. It is not as simple as it seems.
Escrow funds and the need for an escrow company (or escrow agent)
Borrowers of a home loan often do not understand why a mortgage lender would require money to be deposited or placed in escrow. The escrow process is meant to protect all parties involved, for escrow accounts involve a neutral third person or neutral third party.
Before transacting a home sale, money or assets are held by a third party to reduce risks. They are held in escrow until both parties involved meet certain conditions, and both home buyers and sellers benefit.
How do escrows work for an aspiring homeowner?
This is a question that our Calabasas real estate attorney often gets. Escrow instructions define what must take place before closing escrow. For real estate settlement, it is used to hold, temporarily, earnest money deposits. The latter, from the name itself, is deposited to demonstrate seriousness in the planned real estate transactions. Mortgage payment for the principal and interest rate owed, after all, is hard-earned money. The close of escrow and the final walk-through are two of the things that both buyer and seller look forward to after they negotiate.
Escrow fund and closings
After you make an offer, homebuyers or their real estate agents shall ensure that the required earnest money is deposited into an escrow account. This is one of your obligations for you to get a mortgage for real estate. It will also show to the one selling real estate that you are serious with the home purchase and sale.
After finalizing things with the closing agent, title company, and home mortgage companies involved, the earnest money deposit will be released. The escrow deposit could then be applied to the down payment or closing costs. After you close escrow, you may proceed with the next steps.
The home buying process is, in itself, stressful. Going through the closing process, then, could be both nerve-wracking and relieving. Since it is the final hurdle that home buyers deal with after agreeing to buy a house, one must be prepared to avoid delays in the real estate transaction.
Understanding the closing process to ensure it goes smoothly
Understanding the process involved is crucial before the closing negotiations. Consult with our Calabasas real estate attorney to know what you should be expecting. Remember that aspiring homeowners have the chance to clarify aspects that are unclear and ask appropriate questions from the parties involved. Remember that owning or buying a house is not simple. The down and projected monthly payment will determine how much money you borrow, and this will undoubtedly be significant.
Additionally, keep in mind that everything must be pursuant to federal housing state law. Seemingly small details could potentially delay or even cancel the home purchase. As such, a would-be home buyer gets in touch with a professional Calabasas real estate attorney who can give legal representation and advice.
Identifying, gathering, and reviewing necessary closing documents
Missing some details in the documents provided by the mortgage company could lead to mistakes. Read loan documents very carefully to avoid misunderstandings in the mortgage payment arrangements.
Lenders are generally required to furnish mortgage loan paperwork 24 hours before closing. Homebuyers should use this time to read what they would be signing and resolve potential misunderstandings or problems early on. While you are committed to making a monthly mortgage payment, it might be difficult to pay your lender each month if the terms differed from what was intended.
Keep in mind that loan documents must specify the amount that must be brought to the closing. On top of these, a copy of a photo ID of the borrower, good faith estimate, and homeowners insurance policy must be prepared. A check (which generally must be certified) is often the best option for the borrower since a wire transfer could take longer and delay the closing.
For questions on any of the above or on mortgage escrow payment, mortgage insurance premium, contingencies, appraisal, real estate taxes, and insurance payments, contact our Calabasas real estate attorney at Moschetti Law Group.