Your offer was accepted...now what happens during escrow
You finally made it! After submitting more than a few offers only to be outbid by all cash buyers....you now have an accepted offer. This is where all the fun begins. Now that you are officially in escrow, many items need to be reviewed, discussed and inspected as you move forward in the process. The duration of an escrow process will all depend on the closing terms you've agreed to with your lender and the seller of the property. In today's market, a 35 day close is rather aggressive, but doable. Standard closing period is 45-60 days.
You will have three days to wire transfer your good faith deposit, which is typically 3% of the sales price to the designated escrow company. These funds will be used for part of you down payment once you close escrow.
Mortgage financing is now full steam ahead. You will need to keep your lender updated on where you are in the process. Provide your real estate professional with your lender's contact information, because they will be talking throughout the process. The appraisal of the property will need to be ordered by your lender and you will start submitting all pay stubs, tax returns, mutual fund statements and any other documents your lender requests. This is when you will lock in your interest rate, points and loan terms with your lender and get everything in writing.
Home inspections will begin right away. Your agent will have home inspectors that they work with on a regular basis and they will handling the scheduling of everything for you. As the buyer, I always recommend that all parties purchasing the home be at the property during the inspection. Depending on the size of the home, the inspection typically takes two to three hours. If the property is a single family home, the sewer line will also be inspected and we always like to have both done at the same time. That inspection takes less than an hour. Once you have the completed inspection reports, this is when your agent will help you negotiate with the seller for some credits at closing. If you have a property that is being sold "As Is", then they will not grant any credits or prices reductions.
Several documents will need to be reviewed. You will get a thick packet of documents and I encourage you to look through all of them. In this packet will be your estimated closing costs, the title abstract, the title insurance policy schedule of exclusions and all other documents. Also, it's recommended that you review the plat or have a survey done and then walk the property to see if there are any encumbrances. The title company can plot the easements for you. Now is the time, before you close escrow, to try and determine if there are any physical property issues or title issues that could pose a problem.
Review HOA documents if you are buying in a community that has and homeowners association. These documents will include board of directors meeting minutes and notes, financial statements, state disclosures, reserve study (very important), bank condominium certification, HOA unit demand statement, etc. This can be time consuming and overwhelming to review, but I strongly recommend reading everything before closing. It might save you a headache down the road. Some associations for example, limit the number of pets or restrict the size allowed. If you have a large German Shepard and they only allow dogs up to 25 lbs...that's going to be a problem. Please be sure to share that information with your agent up front, so they can ask those questions before even taking you to see properties. True story!
Obtaining property and liability insurance is your next step. Your real estate professional will be able to recommend companies to you if you don't already have one in mind. Discuss and procure the proper type and amount of insurance that you'll need. Your lender will be able to tell you what the coverage amount should be based on the property value and what their requirements are.
Now the time has come to sign loan docs, fund the remaining down payment (minus the 3% that you initially put down), the bank will fund the mortgage loan, escrow & title prepare all documents, properly account for all the funds, then go record your purchase documents at the county courthouse. This is where I say congrats....you're officially a home, townhome, or condo owner!
Your agent will keep everything on track and be in constant communication with you throughout the entire process, so don't feel like you have to remember everything!