7 Steps to Home Ownership
by Tricia Ebert, Realtor®, CSA®, ABR®, BPOR®, CDPE®
Last week we discussed what to do when you find your ideal home, the one that makes you feel "in love." Now we'll discuss the escrow process and buying your new home!
(6) Once the price and terms are
agreed to, and everyone has signed the Purchase Agreement, you will open escrow
with the seller. This means
you will give an “Earnest Money Deposit” to an escrow company or title company
to start the purchase process. Now the clock is ticking. You will have a
specified number of days to do your
physical property inspections, get
the appraisal done (this is ordered by your lender), and get your loan approved.
Trust your Realtor’s guidance on choosing a good property inspector who knows how to look for
problems with the house you want to buy. If possible, take the time to meet
with the inspector at the house during the inspection in case they want to
point out something to you. They will give you a written report with photos,
usually a day or two after the inspection is complete. Review this thoroughly
with your Realtor and see if you are happy with the condition of the property. If not, you may want to send a “Request for
Repairs” to the seller. In this request, you may ask for cash at closing
for you to do the repairs yourself, or you may request that the seller have the
repairs made. If the seller is making the repairs, you should state in writing
that you will have your own contractor or repair person verify that those repairs were made.
The seller may agree to make all of the repairs or just some of
them. Or they may offer to give you cash at closing rather than making the
repairs themselves. You have to decide if what they agree to do is okay with
you.
In addition to the property
inspection, the seller is required to give you a list of disclosures about the
house. This should
specify everything the seller knows about the condition of the house and the
neighborhood. Keep in mind, the seller may not be aware there is a plumbing
leak under the house until your property inspector finds it. The seller isn’t
looking for leaks unless he has a reason to think he has one. Disclosures are based on only what the
seller knows about his own house and his own experience of the neighborhood. He
should note if there is airplane noise or traffic noise that he has noticed.
Keep in mind, however, that what bothers you may not bother him. Be sure to spend some time at or near the
house at different times of the day. It might be really quiet during the
day, but at night you can hear a band playing loudly at a nearby park. Pay
attention to these details to make sure this is the right house for you.
While you’re doing your inspections and reviewing the disclosures,
you will also be working with your lender to give him all the paperwork
required to fully approve your loan to buy the house. Please get organized BEFORE you apply for a loan. The bank will
want to see your last two or three tax returns, your last few bank statements,
pay stubs, and on and on. You need to get copies of these documents to them as
quickly as possible. You have a limited amount of time to get your loan
approved. It’s important to cancel escrow if you find out you cannot get your
loan within this time period, or you risk losing your deposit which can be
thousands of dollars. So keep on top of the paperwork and the requests from
your lender. Get that loan approved as soon
as possible.
Next week: Now that you understand the escrow process, we'll discuss closing escrow, getting title to the house, and getting the keys to your new home! See you next week! :-)