Question: As a buyer of a home in escrow, what happens now?
Answer: Congratulations! You found your new dream home or investment property, and have signed a purchase agreement! In the near future, you will be arranging furniture, picking out paint colors and planting flowers in your new yard, but first, you need to get through escrow.
For a buyer there are several categories of paperwork you will need to complete.
At this point, you have already completed and signed a lot of documents with your realtor, during the negotiations with the seller.
The seller has an obligation to present you with disclosures regarding the property, and you will be given these disclosures, and asked to sign copies to acknowledge receipt.
Your lender (if you have financing) will be asking you to complete many documents to apply and qualify for your loan. You will be asked to provide paycheck stubs, bank statements, tax returns and other items in order to finalize the loan approval.
Documents from escrow will generally have two phases, opening, and closing, with very little in between.
At the opening of escrow you will be given escrow instructions which incorporate the general provisions of the escrow company. You will be asked to complete a Statement of Information form on behalf of the title company, which will help the title company provide you with clear title at closing. You will be given a copy of a title report, which will show you that the seller is the current owner of the home, and what types of matters will affect the ownership of you homes, like easements, or CC&R’s.
You will be asked to provide your desired vesting, or how you want to own the property. This is a very important decision, and some buyers consult their attorney or tax professional for advice. Your vesting has two parts, first you have to decide how you want your name to appear. Do you want your full middle name or initial? When considering this you should keep in mind that many lenders will require that you sign your chosen name fully in all of the loan documents, which could be 50 signatures. Many buyers rethink the decision to use their full middle name when that happens. Please confirm if you want a suffix, such as “Jr.”, keeping in mind that the name you use should match your ID (driver’s license, state ID or Passport) so that you will be able to get your signature notarized.
The second part of your vesting, is the manner that you hold title. For one individual this will be your marital status which is SINGLE (meaning NEVER married), UNMARRIED (meaning formerly married, you don’t get to be “single” again) or WIDOW(ER). If there are more than one buyer, additional vesting needs to be selected (such as Joint Tenants, Tenants In Common or Community Property). This vesting will have long terms consequences in the event of the death of any of the owners, and possibly taxation, so for these reasons it is important to give this matter careful consideration.
In escrow you will be asked to provide your insurance agent/company name and contact information. It is very important that you start speaking to insurance companies as soon as you have the home under contract. You may have to complete applications for the insurance company, they may have questions about the property, require an inspection, or have restrictions on properties they will and will not insure. You may also find it helpful to arrange for several quotes, so that you make sure you get the right policy for your needs. As your lender is going to want to know who your insurance company will be, very early in the process, it is something that should be addressed right away.
After your initial opening package from escrow, you may receive additional reports, such as termite inspections, that will require your approval. There might also be amendments, if any terms of the transaction change, from the initial agreement you and the seller entered into.
Finally, you will be asked to sign closing documents which will include estimated closing statements, loan documents, and final escrow instructions, if any. At this time (usually within a week of closing) you will be instructed as to how much your final funds in escrow need to be, and when to wire funds to escrow for closing.