Understanding the Escrow Timeline and When Certain Steps Should Be Completed
One of the most important parts of the escrow process to understand is when certain steps should be started and completed. When you work with an experienced escrow company like Neighborhood Escrow, we will go over all of these details with you. However, you can also read below to get a generally understanding of the escrow timeline.
Agree to an offer and begin pre-escrow (1-3 days)
The home’s purchase price is negotiated between the seller and the buyer before escrow opens. They will also set up any backup plans. They then begin the process of closing the sale.
Establish initial escrow and fund it (5-7 days)
The escrow account is funded by the earnest money, which is given to the real estate agent. A third-party provider, such as a legal firm, title business, or escrow company, establishes and maintains the escrow account. The escrow business normally charges a fee of 1% to 2%.
Plan home inspections and appraisals (8-21 days)
In order to make sure the house is in good shape and worth at least as much as the desired loan amount, the buyer and their lender hire an inspection and appraisal before closing on the deal.
In most cases, the buyer schedules inspections and the lender schedules the home evaluation. Home safety (foundation, roof, and systems), pests (termites), and environmental inspections are possible (radon, asbestos, lead and mold).
The home is made available to the buyer, and the seller keeps up the utilities so they may be examined. During this phase, the buyer usually gets disclosures concerning the property, such as information on prior natural disaster damage, potential environmental concerns, and other problems.
Receive a loan approval (14-28 days)
Prior to completing the deal, the buyer must complete a mortgage application. To decide whether to approve or deny the loan, the lender will consider the home appraisal and the buyer’s qualifying requirements.
If the buyer is unable to obtain a financing, the process is over. If not, the parties advance toward closing escrow.
Full lender financing (29-43 days)
The lender funding procedure gives the buyer enough time to obtain homeowners insurance. It also comprises a title search to confirm that the seller is able to transfer the buyer a free and clear title. The lender will then start the last phase of the closing process by sending the escrow agent (or lawyer) the final loan documents.
Last-minute walk-through and escrow funding (5 days)
Critical are the final few days before shutting. To ensure that the property is in the same condition as when they made their offer, the buyer does a walk-through. If the buyer asked for repairs, they would make sure the seller did as well.
The buyer and seller sign a Verification of Property form once everything appears to be in order to demonstrate that the buyer had the chance to conduct a final walk-through of the property and was happy with its condition. In order to pay for the down payment, closing charges, and other fees, the buyer then makes the last payments to escrow.
Escrow closes (1 day)
It’s finally time for closing! To complete the property sale, the buyer and seller must sign a plethora of paperwork. Following the recording of the deed and the closing of escrow, the escrow agency releases the monies.
