Offer Acceptance to Closing: What You Want To Know

Congratulations on having your offer accepted!

The information in this article will help you become a little more knowledgeable with the escrow process.

We hope to answer some of your questions in advance and provide you with step-by-step information that will help clarify your part in this process.

Opening Escrow

How does the escrow process work?

The escrow is a depository for all moneys, instructions and documents necessary for the purchase of your home, including your lenders funds and documents for your new loan.

The escrow officer takes instructions based on the terms of your purchase agreement and your lenders requirements.  The escrow officer can hold copies of your inspection reports and bills for the work performed, as required by your purchase agreement.

Other elements in the escrow include hazard insurance, title insurance and the grant deed from the seller to you.

Escrow cannot be completed until all requirements have been satisfied, and all parties have signed all of the escrow documents.

The Loan Process

What happens after I submit the loan application?

The lender will begin the qualification process, including verification of information submitted on the application and appraisal of the property value.

The lender will require that you obtain hazard/fire insurance on the dwelling.  You will also want to obtain additional coverage for your personal property.

The lender may have additional requirements that will need your attention prior to close of escrow.

Escrow Instructions

When do I sign escrow instructions and where do I do this?

After the escrow officer has prepared instructions and final documentation for signature, you’ll be contacted to schedule an appointment for signing.  The signing is usually done at the title company.

At your signing, the escrow officer will explain all credits and debits.  You’ll be advised of the amount of money needed for your down payment & closing costs.  This check must be in the form of a cashier’s check.

The escrow officer provides an important function in the transfer of real property.  In addition to preparing instructions and final closing papers, the escrow officer orchestrates the ordering and delivery of documents and funds necessary to close the escrow.  The charge for this service is set out in your instructions.

 

Explanation of Charges

The cost of title insurance and escrow services is the obligation of either the buyer or seller, depending on the terms of the purchase contract.

TITLE INSURANCE
For the home owner, a home owner’s policy is issued.  Premiums are based on the sale price.  The term is for as long as you are in your home.  If there is a mortgage, then the lender also requires a policy to be is issued to the lender, based on the loan amount.  The term is for the length of the loan.  Remember, for future refinancing, the lender will require you to pay another pay loan policy.

NOTARY FEES

Usually $10 per signature.

ESCROW FEE
This is determined by the sale price.

FIRE INSURANCE
All lending institutions require a buyer to purchase a full policy of fire hazard insurance on property based on loan amount or guaranteed replacement cost, as part of the closing costs.  This payment is for the first year, in advance.

PEST INSPECTION FEE
$200 – $300 paid to a state licensed company. There may be other inspections you wish to perform.  Speak to us regarding questions you may have.

LOAN FEE
Will very depending on lender; usually from 1% to 3% percent of loan amount.

TAX SERVICE FEE
Required by lender; an inspection of tax records to ensure payment.

APPRAISAL FEE
Lenders require a field appraisal prior to loan commitment.  Fees vary ranging from $400 – $500.

INTEREST
MOST lenders prorate interest on a 360-day per year and charge a full 30 days of interest per month.  Partial months per-diem rate computed on 360 day year.

Confused About Who Pays?

Common Seller & Buyer Costs
The SELLER can generally be expected to pay for:	The BUYER can generally be expected to pay for:
Real estate commission Document preparation fee for deed Documentary transfer tax Payoff of all loans in seller’s name (or existing loan if being assumed by buyer) Interest accrued to lender being paid off, statement fees, reconveyance fees and any prepayment penalties Home warranty (according to contract) Any judgments, tax liens against seller Recording charges to clear all document of record against seller Tax pro-ration (for any taxes unpaid at time of transfer of title) Any unpaid homeowners dues Any bonds or assessments (according to contract) Any and all the delinquent taxes Notary fees	Title Insurance Premium Escrow Fees Document preparation fee (if applicable) Notary fees Recording charges for all document in buyer’s names Tax pro-ration (from date of acquisition) Homeowner’s transfer fees All new loan charges (except those required by lender for seller to pay) Interest on new loan from day of funding to 30 days prior to first payment date Assumption/change of record fees for takeover of existing loan Beneficiary statement fee for assumption of existing loan Inspection fees (termite, property inspection, roofing, geological, etc) Fire insurance premium for 12 months

Holding Title Chart

	TENANCY IN COMMON	JOINT TENANCY
Parties	Any number of persons (can be husband and wife)	Any number of persons (can be husband and wife)
Division	Ownership can be divided into any number of interests, equal or unequal.	Ownership interests cannot be divided.
Title	Each co-owner has a separate legal title to his undivided interest.	There is only one title to the whole property.
Possession	Equal right of possession.	Equal right of possession.
Conveyance	Each co-owner’s interest may be conveyed separately by its owner.	Conveyance by one co-owner without the other breaks the joint tenancy.
Purchaser’s Status	Purchaser becomes a tenant in common with the other co-owners.	Purchaser becomes a tenant in common with the other co-owners.
Death	On co-owner’s death, his interest passes by will to his devisees or heirs. No survivorship right.	On co-owners’ death, his interest ends and cannot be willed.  Survivor owns the property by survivorship.
Successor’s Status	Devises or heirs become tenants in common.	Last survivor owns property in severalty.
Creditor’s Rights	Co-owner’s interest may be sold on execution sale to satisfy his creditor. Creditor becomes a tenant in common.	Co-owner’s interest may be sold on execution sale to satisfy creditor.  Joint tenancy is broken, creditor becomes tenant in common.
Presumption	Favored in doubtful cases except husband and wife. (See community property).	Must be expressly stated and properly formed.  Not favored.

THIS IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. SPECIFIC QUESTIONS FOR ACTUAL REAL PROPERTY TRANSACTIONS SHOULD BE DIRECTED TO YOUR ATTORNEY OR CPA

COMMUNITY PROPERTY	COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP
Only husband and wife.	Only husband and wife and only when interest is created on or after July 1, 2001.
Ownership interests are equal.	Ownership interests are equal.
Title in the “Community.” (Similar to title being in a partnership)	Title in the “Community.” (Similar to title being in a partnership).
Equal right of possession.	Equal right of possession.
Both co-owners must join in conveyance of real property. Separate interests cannot be conveyed.	Both co-owners must join in conveyance of real property. Separate interests cannot be conveyed.
Purchaser can only acquire whole title of community. Cannot acquire a part of it.	Purchaser can only acquire whole title of community. Cannot acquire a part of it.
On co-owner’s death, ½ goes to survivor in severalty. Up to ½ goes by will or succession to others. (Consult attorney with specific questions).	On co-owner’s death, decedent’s interest ends and cannot be willed.  Survivor owns the property by survivorship.
If passing by will, tenancy in common between devisee and survivor results.	Last survivor owns property in severalty.
Co-owner’s interest cannot be seized and sold separately. The whole property may be sold to satisfy debts of either husband or wife depending on the debt. (Consult attorney with specific questions).	Co-owner’s interest cannot be seized and sold separately. The whole property may be sold to satisfy debts of either husband or wife depending on the debt. (Consult attorney with specific questions).
Strong presumption that property acquired by husband and wife is community.	Strong presumption that property acquired by husband and wife is community.

 

Your Appointment

What do I need to do before my appointment to sign the escrow papers?

LENDER’S REQUIREMENTS 

Make sure you are aware of your lender’s requirements and that you have satisfied those conditions before you come to the title company to sign your papers.  Your lender can assist you with this.

HAZARD/BUYER INSURANCE 

Be sure to order your hazard/fire insurance once your loan has been approved.  Then call your escrow officer with the insurance agent’s name and phone number so they can make sure the policy complies with your lender’s requirements.  If you do not have an insurance agent, call us for help.

IDENTIFICATION 

Please bring either your valid drivers license/ID or passport with you to the title company.  This is needed so that your identity can be verified by a notary public.

A CASHIER’S CHECK

Obtain a cashier’s check or certified check made payable to the title company in the amount indicated by your instructions.  A personal check may not be accepted or may delay closing.

How should I vest title?

Decide how you wish to vest your title to your new home prior to appointment with the title company.

The chart above provides a summary of common options for information purposes only.

We suggest you contact your tax accountant or legal adviser if you have any specific questions.

What happens after the signing

What is an “Escrow Closing”?

An escrow closing is the culmination of the transaction, which signifies legal transfer of title from the seller to the buyer.

Usually the Grant Deed and Deed of Trust are recorded within one working day of the escrow’s receipt of loan funds.  This completes the transaction and signifies the “close of escrow”.  Once all the conditions of the escrow have been satisfied, the escrow officer advises you or us of the date your escrow will close and takes care of the technical and financial details.

When will I receive a deed?

The original deed to your home will be mailed to you by the County Recorder’s Office.  This takes about six to eight weeks.

What’s next after you sign instructions?

After you have signed the necessary instructions and documents, the escrow officer will return them to the lender for a final review.

This review usually occurs within a few days and upon completion, the lender is ready to fund your loan.