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Going through
escrow
After
your offer has been accepted, the house
goes through an escrow process for about
a month. During this period, an escrow
or title insurance company (or a lawyer) transfers
ownership of the property from the
seller to the buyer after making sure
that all of the terms of the contract
have been met. These companies normally
charge about 1-2% of the purchase price
of the house. Part of this is paid by
the seller, part by the buyer, usually
according to local customs.
In my
experience, the escrow process has
always been the easiest part of buying a
house. During
the escrow period, you'll get
preliminary reports and documents that
will need to be signed. When escrow
closes, you'll get a final report.
Shop around once more for the best loan
Even if
you've been pre-approved for a loan,
you'll want to shop carefully to make
sure the loan you're being offered is
the best around. Remember--you're under
no obligation to get your loan from the
company that gave you the pre-approval
letter. Here are some tips:
- Be
wary. There are, unfortunately, bad
actors in the lending business. The
Mortgage Professor lists many dirty
tricks on
this page of his invaluable
website and recommends that you work
with an
Upfront Mortgage Broker when
shopping for a loan.
-
Figure out what kind of loan you
want. Do you want your loan to be
fixed or adjustable? What points do
you want to pay? What loan term do
you want? To help you through these
decisions, visit
this page on the Mortgage
Professor's website.
- Do
your homework--a slightly lower
interest rate can save you lots of
money over time. Visit
this page of the Mortgage
Professor's website for more tips on
shopping for a loan.
-
Play different lenders off against
each other. If a lender offers
you a good rate, call a rival lender
and ask if he or she can beat it.
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People will often spend
more time shopping for shoes
than they will a loan. But
shopping for a slightly
lower interest rate can save
you lots of money over
time. |
Home inspections
Soon after
escrow opens, you'll want to arrange for
a home inspector, who will check out all
of the housing systems and appliances to
make sure they work properly. Many
lenders insist that you get one, but
it's wise to do so even if they don't.
You, the
buyer, should always accompany the home
inspector as he tours your house. If
there are problems, he or she can answer
a lot of questions about repair options
and estimated costs.
If your
inspector finds problems with the house
that haven't been disclosed by the
seller, you'll usually have the option
of walking away from the deal. But most
buyers instead negotiate with the seller
over who should pay for the repairs.
The outcome of this negotiation usually
depend upon the relative bargaining
strength of the two parties. If you've
offered a good price for the property,
the seller might readily agree to pay
for all repairs. If your offer was low,
the seller might insist that you pay.
If you're
borrowing money, your lender might
complicate things by insisting that
major repairs be done before escrow
closes.
Final inspection
Sales
contracts often give have the right to
re-inspect the property just before it
closes to make sure that the house
hasn't been damaged during the escrow
process and to make sure that everything
that is supposed to stay with the house
has been left behind. I've never
exercised my right to a final
inspection, but it might be a good idea
if you're distrustful of the seller.
Sign
documents
A few days
before escrow closes, you'll need to
sign a bunch of documents. If you're
working with a traditional buyer's
agent, you'll normally sign these papers
at his or her office. If you're working
with a discount broker, you can normally
do this at the escrow office or title
insurance company.
When
you sit down to sign the documents,
you'll normally be asked how you want to
hold title. In California, for example,
a married couple can hold property as a
joint tenancy or as community property
or as community property with rights of
survivorship or in a trust. Don't just
guess at an answer--as
this article explains, there are big
tax and legal issues at stake.
Unfortunately, your agent won't be able
to offer you any advice on this, so talk
with a lawyer or CPA beforehand.
Move in
If you've made it this far, you're
probably the proud owner of a new home.
Congratulations. If you have any
stories to tell about how you captured
the commission, please drop me a line at
alden@sonic.net. I'd love to
hear from you.
Useful resources:
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