Opening
& Closing Escrow
Escrow
A
neutral third party holds documents and money for a real estate
transaction and ensures that all conditions of a sale are met.
Also refers to a special account that a lender uses to hold a
borrower's monthly payments on property taxes and insurance. A
lot has to happen in the weeks before you close. Stay on top of
the details so you can close on time, keep costs down, and understand
everything you sign.
Control
Closing Costs
Closing
costs usually equal 2 to 7 percent of your home's sales price.
Usually, you have to pay these costs in cash, in addition to the
money you've earmarked for a down payment. Your lender may agree
to add the fees to your total loan amount, though, so you can
pay them off in monthly installments.
Federal
law requires your lender to provide a detailed estimate of your
closing costs within three days after the lender receives your
loan application. Start planning for these costs now, and ask
the lender to include them in your loan amount if you want to
minimize the amount of cash you need to close the sale.
Develop
a Schedule Create a Closing Plan to complete tasks on time.
Everyone
involved in your transaction must perform dozens of tasks before
you can close on your home. Use the checklists provided to create
a "Closing Plan," so you can manage the work and keep the process
on track.
Your
Closing Plan
Get
ahead by organizing the tasks required for closing. Complete remaining
tasks and make final arrangements. Be prepared, bring the right
papers, and know what you're signing.
Know
the Paperwork
You'll
be better prepared for closing if you review the four most important
closing-related documents:
-
Form
1003- A standard loan application that most US lenders
use. Usually 3 to 6 pages long.
-
Inspection
Report -A report on the condition of the house that includes
an examination of appliances, plumbing, electrical systems,
roof and structure. Usually 5 to 20 pages long.
-
Closing
Cost Estimate- A disclosure form the lender provides to
estimate the cost of various transaction-related expenses,
from loan points to pest-control reports. Usually one or two
pages long.
-
Deed
of Trust- Often substituted for a mortgage. This document
helps to establish both your interest and the lender's interest
in the property and to define each party's obligations. Usually
two pages long.