Home buying is currently en vogue again. And, homebuyers in North San Diego County and beyond have been busy searching the Internet for homes for sale and attending open houses. Once you have found the home that you are looking for, you write your offer and it is accepted. Hurray!
BUT, WHAT’S NEXT? WHAT IS ESCROW?
In the state of California, the period between the time and your offer is accepted and the time that you get the keys is called the escrow period. The word “escrow” defines a murky period that many people both inside and outside the industry don’t really understand.
The escrow period is the time to inspect the home more carefully, to learn more about the home by conducting due diligence activities like reading the Natural Hazard Zone Disclosure Report, the preliminary title report, the seller’s disclosures. It is also the time when your lender (if you are obtaining a loan) processes all of the paperwork necessary to provide you with your mortgage. The lender sends an appraiser during the escrow period. An arbitrary third party (an escrow company) oversees the purchase process and assures that the terms of the contract are adhered to in the purchase.
One important part of the loan process involves obtaining an appraisal. As a contingency of providing you with a mortgage loan, your lender will send out an appraiser to appraise the home and confirm the property value. With the market moving like gangbusters, it is not uncommon for buyers to get involved in bidding wars and offer more than the asking price, only to learn later that the appraised value is lower than the agreed sales price.
Mortgage lenders may not make loans on amounts above the appraised value of the property. So, if you find yourself in a pickle, it’s important to have a good buyer’s agent on your side—one that knows how to deal with little hiccups that may occur in the midst of the home buying process.
If you or anyone you know has questions about the home buying process, we can help. Call the agents at Broadpoint Properties.