Las Cruces Real Estate | Homebuying-101: Escrow Period
Next up in our Homebuying-101 series, we’re going to discuss the escrow period. What exactly is the escrow period and what does this next step entail? From earnest money to homeowner’s insurance, we’re going to address it all. So you know the drill, grab a pen and some paper – let’s get started!
Once your offer is accepted by the seller it starts the escrow period.You will need to deposit earnest money with the title company, which is typically between $500 - $5000, depending on the purchase price and the type of loan that you are utilizing. The earnest money will then be applied to the final purchase of your property. This shows the seller that you are committed to purchasing their home.
By the time you have opened escrow, you have come to an agreement with the seller on the closing date and the contingencies. The escrow period is usually 30 days and each item specified in the contract must be completed satisfactorily.
Each contract is different, but most include the following four items:
1. Inspection contingency: this should be completed as soon as possible after the contract is signed. If the results of the inspection are unsatisfactory you can negotiate repairs or cancel the contract.
2. Financing contingency: Once the contract is signed, you have a period of time to secure funding. If you are unable to secure funding during the period of time granted to you by the contract (and the seller will not provide a written extension of time), you must decide whether you want to cancel the purchase. This is why being pre-approved before shopping for a property is so important!
3. It is a requirement that the seller must provide a marketable title. The title must be "clear" to ensure that you do not have legal issues regarding your ownership. We will rely on the title officer to make sure everything is satisfactory regarding property transfer and make sure that you and/or the seller are free of any liens or other contingencies.
4. Secure homeowner's insurance. This is almost always required before you can close the sale. It best to apply for insurance as soon as possible after the contract is signed.
If you have questions or are ready to begin the home buying process, please reach out to us here or you can find our contact info at the bottom of the page.
If you’ve missed any of our Homebuying-101 series, you can find the complete list of topics and discussions here.