Opening & Closing 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
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.