After months of searching you’ve finally made an offer on the perfect home—and the sellers have accepted. Yeah! The hard part is over now, right? Well, not completely. Your real estate agent says, “Now we’re in 30-day escrow,” (or some other number of days). What does that mean? After an offer on a home has been accepted, the seller and the buyer enter a final period of “obligation fulfillment” before the property transfer is completely finalized and official.
This period is called escrow
Simply defined, an escrow is a deposit of funds, deeds or other legal instruments held in trust by a neutral third party (known as an “escrow holder”) until a series of required transactions is completed.
Following these steps will help ensure that your 30-day escrow actually takes no more than the allotted 30 days.During escrow, the escrow holder oversees equally the rights and responsibilities of both the seller and the buyer by ensuring all the required steps of the real estate transaction are completed successfully before the title of the property changes hands. Simply put, escrow is a process that is designed to facilitate the sale of a home while minimizing the risk, and protecting the rights of both the purchaser and the seller (known as the “principals”). In most states that require escrow closings, thirty days is the minimum (and the most common) length of time for the closing of an escrow. (In some states, the transfer is completed at a closing transaction at which all parties and necessary documents are present.) However, it is worth noting that delays are not uncommon and 45- and 60- day escrows are also commonplace.
“30-day escrow” refers to escrow at closing and should not be confused with a “mortgage” or “lenders” escrow – the safekeeping of your tax and insurance funds by whoever owns your mortgage. If your mortgage company pays taxes and insurance each year on your behalf, they generally divide the total by 12 and charge you that amount every month on top of your loan payment. You pay these extra funds in advance and they are held in a mortgage escrow account until the taxes and insurance are due.
What happens during escrow?
Some of the typical tasks that are completed during a 30-day escrow include, but are not limited to:
- Confirm who holds title and establish how title is to be transferred
- The buyer deposits the agreed-upon funds with the escrow holder
- If a buyer has requested a home inspection, this is when it is conducted
- The bank/financial company providing the loan to the buyer conducts a home appraisal to certify its value
- Seller shows proof there are no liens against the house and that all taxes on the home are paid
- The buyer purchases a home insurance policy on the new property
- Buyer conducts a final home walkthrough before taking possession
As noted, it is not uncommon for escrow to run over the time stipulated. Here are some ways to ensure you complete escrow smoothly in 30 days:
- Respond quickly to any information or document requests from the escrow holder
- Buyers should obtain mortgage pre-approval before entering escrow
- Sellers should ensure that there are no liens or judgments against their property and that there are no issues with who holds the property’s title
Following these steps will help ensure that your 30-day escrow actually takes no more than the allotted 30 days.
When everything is completed, the escrow holder will issue a closing statement that details and confirms the accounts, transactions and fund transfers that took place, and will signal the official “closing” of the sale of the home. Now the transfer is final.
Mortgage Capital Associates (MCA)
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