ESCROW PROCESS FOR THE BUYER
First Time Buyers Resources:
Watch This Short Video Explaining Escrow provided by Chicago Title
First Time Buyers Guide To Escrow Process:
Once offer has been accepted and escrow is opened, here is a list of what to expect:
1. INSURANCE: Begin to research homeowners insurance. You will need to have insurance in place by the close of escrow.
A. You may want call your current auto or renter’s insurance carrier since they will often give discounts on multiple policies. If you are purchasing in the PML Subdivision, let your insurance agent know that your property is with in 300 feet of a fire hydrant.
For a recommendation, we can provide the following:
Eason Insurance Agency- Richard Eason 209-383-7322
Cutler Segerstrom- Tamelyn Job 209-532-6951
b. If you are buying a condominium, you should also check with the insurance company that insures the building (this information can be found in the Homeowners Association documentation). This assures that the inside and the outside of your property are insured by the same company. In the event that a claim is filed, having the entire claim handled by one company will help you avoid unnecessary stress and economize your time.
2. LOAN: Call your lender and let them know you have opened escrow. He or she will need a copy of the signed contract right away. Some lenders require you to pay for the appraisal up front.
3. INSPECTION: Your contract likely calls for a buyer’s investigation contingency. This could be anywhere from 17-21 days, depending on what we have negotiated. Regardless of the contingency period, it is important that we schedule a home inspection and begin completing our due diligence as quickly as possible.
A. General home inspectors vary in price according to the property size and the scope of the inspection. The inspector will quote you a price when you schedule the inspection and you must bring a check to the inspection or make other arrangenments. If you do not have a general inspector of your own, we can provide the following referral:
i. Craig Seals: Gold Country Home Inspections 209-.923.3175
ii. Bob Lennen: Lennen Associates 209.962.4642
B. You may choose to schedule additional inspections immediately, such as a geological, septic, sewer Pest or chimney inspection. Feel free to contact mein person to discuss the pros and cons of each extended inspection, fees involved, and any referrals.
C. Inspections always reveal repairs that are necessary, and each escrow is different in terms of what we can expect from the seller. If the inspections uncover any major issues that you had not expected, we will then request that the seller remedy these issues prior to the close of escrow. Sometimes a seller will agree to pay a credit toward buyer closing costs in lieu of repairs. Hopefully, both sides can agree on what repairs the seller can make or repairs for which the seller can provide credit to the buyer, then we can remove the contingency and move forward. If for some reason you uncover something during the inspection that makes you change your mind about purchasing, or if you and the seller cannot agree upon repair issues, you have the option of backing out without losing any money (except what you have spent out of pocket for inspectors). Again it is very important to stay within the timelines of the contingency periods in order to protect your earnest money deposit.
D. During this time, it is important that you also explore any other factors in determining whether or not this is the right home for you. An investigation contingency is there to allow buyers time to really dig deep and think about all the things that are important to them in this purchase. Do you want to pull permits? Do you like the neighbors? What about the school district? How is the commute?
A. Deposit: Upon opening escrow, you’ll receive wire instructions and be asked to put your earnest money deposit into an escrow account. Your deposit will be held in a 3rd party trust account until the close of escrow, at which point it will apply toward your down payment and closing costs. shortly after escrow is opened, you will receive escrow instructions and these will outline the terms of your deal including the contingency dates.
B. Escrow Instructions: Please review and sign the documents in the escrow package and if you would like, feel free to call me to arrange a meeting so that I can help you review this information. Some of the documents in the escrow package are:
i. Preliminary Title Report: This will let you know if there are any liens, encroachments, easements, etc. affecting title to the property.
ii. Title Vesting Information: You will be asked how you will take title to the property. Please consult an attorney with any questions regarding this.
iii. HOA Documents: This applies to those who are purchasing a condominium, townhouse or single family residence within a Homeowners Association. It is a package from the Homeowners Association president and includes the associationaccounting information, minutes from the meetings and the covenants, conditions, environmental committee guidelines, and restrictions (CC&R’s).
5. CONTINGENCIES: You have three possible contingencies: Loan, appraisal, and investigation. Contingencies must be removed in writing, unless specified otherwise in the contract. Your contingency periods for each are:
B. Appraisal: _____________.
C. Investigation: _______________.
Each contingency is there to protect you, the buyer. The loan contingency says that the purchase you agreed to is contingent upon you getting the loan specified in the contract. If you are not approved for the loan, you can back out of the deal. The Same goes for appraisal and inspection.
6. DISCLOSURES: You will get a stack of disclosures which will tell you about any matters affecting the property. I will go over these with you. Some important disclosures include:
A. Natural Hazard Report: This will tell you about any hazards, such as earthquake fault zones or fire severity zones, that are on or near the property.
B. Transfer Disclosure Statement: This will disclose any property defects known by the Seller and the Agents.
C. Agent Visual Inspection Disclosure: This disclosure requires both agents to do a thorough walk-thru of the property and note any conditions or issues they see. In addition, agents are required to disclose any defect they have knowledge of, whether visible or not.
D. Seller Property Questionnaire: The purpose for this disclosure is for the seller to inform the buyer about any known material or significant items affecting the value or desirability of the property and to help eliminate misunderstandings about the condition of the property.
7. CONTINGENCY REMOVAL: Once the appraisal has been completed and reviewed, the loan has been approved and the investigations have been completed, you are ready to remove your contingencies! This is done in writing, and is a buyer’s way of saying that s/he is fully satisfied and ready to close this deal. Upon removal of contingencies, you will no longer have the option to cancel escrow without sacrificing the initial 3% deposit to the seller.
8. CLOSING: As we approach the close of escrow date, you’ll be working with your loan officer to clear any conditions as required by the lender. Once this is accomplished, the lender will prepare the loan documents and send them to escrow in preparation for signing. You will be contacted by escrow to set up an appointment to sign your documents. You’ll need to keep your schedule rather flexible during this time, as we are often in a rush toward the close and buyers need to be ready to sign documents once escrow receives them.
A. During the signing, you will receive a Buyer’s Estimated Closing Costs Statement. This is a record of all the debits and credits incurred by the buyer during the entire course of escrow (escrow fees, title fees, loan fees, any credits issued by the seller, etc.). this statement will show any wiring instructions, as well as the total amount needed to complete your down payment and cover any closing costs.
B. THE BANK MUST RECEIVE THE wire by ____________________________. The escrow package you received included wire instructions. Because the funds need to arrive at escrow two days prior to the close date, the bank must receive the wiring instructions as soon as possible.
C. Final Walk -Through should be completed by ______________________________. This is an opportunity for you to walk through the property prior to the close of escrow and verify that it is being delivered in essentially the same condition as when escrow was opened.
D. UTILITIES: around the same time, you will want to contact utility companies to have the utilities set up in your name, as well as discontinue the utilities in your existing home or apartment. Here are some phone numbers for your reference:
-directv – 888.795.9488
-at&t – 844.723.0252 / www.att.com
-Verizon – 800.837.4966 / www.verizon.com
-Moore Bros Garbage- 209-962-962-7224
-PML HOA- 209-962-8600/ www.pinemountainlake.com
-Conifercom.net- 866-378-8393 high speed internet
E. Keys! The last few days of an escrow are a whirlwind and everything is time sensitive. Here is what you need to know:
I. Loan documents are signed, and immediately returned to the lender. Everything at this point is time sensitive. The lender then gives escrow the funding conditions.
II. Escrow will “fund” the loan the day before we close (your wire needs to be in escrow by this time as well). Once the funding is complete, we will be notified.
III. The day after funding, the sale records with the county recorders office. Again, we will be notified once this happens. The recording is what makes it official, and once the word is out and the file has been recorded, you can pick up keys.
Important Information Regarding Your Escrow:
Escrow Company: __________________________________________