The Purchasing Process:
You've chosen a home. Now what happens?
The actual process of buying a new home can often cause anxiety and confusion, and can seem like it's taking too long. The good news is that understanding the basic step-by-step procedures, and knowing the things you can do to make it go more smoothly, can make it a much easier and almost painless process. And knowing the steps ahead of time can even make the waiting more enjoyable!
Escrow. What you need to know.
There are four major players in the homebuying process. The buyer.(You!) The seller – the builder in the case of a new home. The lender. And the escrow holder.
The escrow holder and the escrow officer act as a neutral third party or go-between that works in the best interests of both the buyer and the seller. Based solely on the authority of the buyer and seller, the escrow holder collects the necessary funds such as closing costs, title insurance and recording fees. The escrow officer holds all money and documents as the transaction is done, and also receives instructions from the lender on loan conditions.
Your escrow company will ask you, the buyer, to provide deposit funds and funds for property and closing costs, deed of trust or mortgages needed to secure the loan, arrangements for borrowed funds to be deposited into escrow, and, if needed, any necessary documents.
At "close of escrow", when all conditions are met, your escrow holder will make sure documents are recorded and funds are disbursed; and forward loan documents to the lender. Oh yes...the lender...
Where does all the money come from?
Perhaps with the help of your real estate agent or your builder's sales consultant, you've chosen the company – usually a bank or mortgage company – that will lend you the money to buy your home.
Of course, since that company is lending you thousands of dollars , they'll want to know more about you. That's where the loan application comes in. It will ask you for personal information, as well as financial information such as salary, savings deposits, and other open loans. Based on all this information, the lender begins the qualification procedure...which includes verification of the information you've provided on the application.
So that your qualification goes as quickly as possible, make sure you remember to include all information about credit card balances and other loans and debts you may have.
Since it is the lender's money which is paying for the home, the lender will want you to provide proof that you have hazard/fire insurance, and that both your interests and theirs are protected with title insurance.
Title Insurance: Protecting your Ownership
Title insurance insures against problems with title (ownership) of your property, with liens that may be found, or with problems involving boundaries or right of access. Not to worry. Especially with a new home in a builder subdivision, this will most likely not happen.. But your title insurance would offer protection in the event there is a valid claim against the property, and would help defray any costs incurred in defending any claims which might be brought.
Your "closing appointment"... signing the escrow papers
When all the steps up til now have been taken care of and your loan is approved, it's time for your closing appointment where you'll sign the escrow papers. You will need to bring a cashier's check in the amount indicated by your escrow officer and valid I.D. so that your identity can be verified by a notary public. You'll also need to show that you have your fire/hazard insurance policy before the lender will actually send money to the title company. Now you're almost home!
The actual closing
You've signed all the instructions and documents. Now the escrow officer sends them back to the lender for a final review. Usually after a few days, the lender is ready to fund the loan. When the escrow company hears from the lender, the Deed and Deed of Trust are recorded, and the transaction is complete. Congratulations! You can ask for your keys. You are now the owner of your new home!
