a buyer's offer has been accepted, the house goes through an escrow
process for about a month. During this period, an escrow
or title insurance company transfers ownership of the
property from the seller to the buyer after making sure that
all of the terms of the contract have been met. These companies normally charge about 1-2% of the purchase
price of the house. Part of this is paid by the seller,
part by the buyer, usually according to local customs.
my experience, the escrow process has always been the easiest part of
buying a house. The escrow officer usually calls to introduce himself
or herself and to offer to answer any questions. During the
escrow period, you'll get preliminary reports and documents that
will need to be signed. When escrow closes, you'll get a final
Shop around once more for the best loan
Even if you've been pre-approved for
a loan, you'll want
to shop carefully to make sure the loan you're being offered is the
best around. Remember--you're under no obligation
to get your loan from the company that gave you the pre-approval
letter. Here are some tips:
- Be wary. There are,
unfortunately, bad actors in the
lending business. The Mortgage Professor lists many dirty
tricks on this
page of his invaluable website and recommends that you work
with an Upfront
Mortgage Broker when shopping for a loan.
- Figure out what kind of loan you want. Do you want your
loan to be fixed or adjustable? What points do you want to
pay? What loan term do you want? To help you through
these decisions, visit this
page on the Mortgage Professor's website.
- Do your homework--a slightly lower interest rate can save you
lots of money over time. Visit this
page of the Mortgage Professor's website for more tips on shopping
for a loan.
after escrow opens, you'll want to arrange for a home inspector, who
will check out all of the housing systems and appliances to make sure
they work properly. Many lenders insist that you get one, but it's
wise to do so even if they don't.
the buyer, should always accompany the home inspector as he tours your
house. If there are problems, he or she can answer a lot of
questions about repair options and estimated costs.
your inspector finds problems with the house that haven't been disclosed
by the seller, you'll usually have the option of walking away from the
deal. But most buyers instead negotiate with the seller over who
should pay for the repairs. The outcome of this negotiation
usually depend upon the relative bargaining strength of the two
parties. If you've offered a good price for the property, the
seller might readily agree to pay for all repairs. If your offer
was low, the seller might insist that you pay.
you're borrowing money, your lender might complicate things by insisting
that major repairs be done before escrow closes.
contracts often give have the right to re-inspect the property just before it closes to make
sure that the house hasn't been damaged during the escrow process and to
make sure that everything that is supposed to stay with the house has
been left behind. I've never exercised my right to a final
inspection, but it might be a good idea if you're distrustful of the
few days before escrow closes, you'll need to sign a bunch of
documents. If you're working with a buyer's agent, you'll normally
sign these papers at his or her office. If you're buying a FSBO
house, you can normally do this at the escrow office or title insurance
sit down to sign the documents, you'll normally be asked how you
want to hold title. In California, for example, a married
couple can hold property as a joint tenancy or as community property
or as community property with rights of survivorship or in a trust.
Don't just guess at an answer--as
this article explains, there are big tax and legal issues at
Unfortunately, your agent won't be able to offer you any advice on
this, so talk with a lawyer or CPA beforehand.
Alden, 2008. All rights reserved.