10 Things To Remember During The Escrow Process When Buying A Silver Lake Home
Posted by Jenny Durling on Tuesday, October 18, 2011 at 7:31:45 AM By Jenny Durling / October 18, 2011 Comment
There are lots of things to think about when looking for that perfect Silver Lake Home. Once in escrow there are other things to remember during the escrow process. The seller has accepted your offer, you have loan approval, and now you just count the days until escrow closes and the keys to your Silver Lake home are dropped into your hands. Well, it can be simple and smooth IF you make sure to do and NOT do certain things before the loan funds and title can be transferred into you name. If you are not careful, you can slow down or even completely nadvertently prevent escrow from closing.
1. Remember that you are under contract and time is of the essenceDepending on how your purchase offer was written, you most likely have three business days to deliver your earnest money deposit to escrow. As soon as your agent provides you with the escrow information, make sure to put that money into escrow. You can give a check to your agent, drop one off to escrow or even wire the funds directly from you bank. If escrow does not have your earnest deposit within the time frame specified in your contract, the seller can cancel the agreement before you even get started! Each of your contingencies- Inspection, loan and appraisal have specific time frames in which they need to be completed. Make sure to stay within those timeframes or have your agent work with the seller’s agent to obtain extensions if necessary.
2. Buying your Silver Lake home may be stressful, but remain as unemotional as possibleObviously, there are things about this particular Silver Lake property that got you excited enough to throw your hat in the ring but don’t move blindly forward. Make sure you have the home inspected. I have yet to see a general inspection come back as 10 sheets of blank paper. No house is perfect, whether old or new, but be realistic about the property condition and don’t expect the seller to fix everything (or anything!) that comes up during the inspection. In most short sale and bank-owned situations, there will be little if any room for negotiating repairs. Typically such Silver Lake homes are sold below market value and you buy one “as is”, or the seller will move onto the next buyer. Be realistic about what you willing and able to take on yourself and be sure not to bite off more than you can chew. With standard sales, you have a much better chance of being able to negotiate some repairs or credit for needed work. Some sellers will fix everything, but most will be inclined to give you credit towards your closing costs. Rarely will they cover the WHOLE cost, so don’t expect the moon. Even if the seller refuses to negotiate repairs in any way, keep calm. Decide how much you want this home and whether the cost to repair it still makes it worth the price you offered. Don't get into fighting mode. I’ve had clients fighting over $1000 worth of repairs. The buyers didn’t want the seller to ‘win’ and because they let their emotions run high, they almost didn’t buy the house they loved! Think of all the homes you’ve looked at and why you chose this particular one. Can you buy a Silver Lake home you like just as much as this one for the same price plus that extra $1,000 in repair costs? If not, accept the situation and move forward. If you think these homes are a dime a dozen, then cancel and move on to the next one. In either case, make sure that you are making that decision with logic and not emotion.
3. Remember to get your Home Insurance lined upDon’t wait until the last minute to arrange for hazard insurance. You need to take care of this during your physical inspection time period. If there is something about the property that will prevent you from being able to insure it or the price of insuring it is outside your budget, it’s best to know that right up front. Talk to your lender about what insurance will be required. Then talk to insurance agents to determine what policy is the best for your situation. Be sure to get enough insurance to replace the home as well as your personal belongings. If you have car insurance you are happy with, check to see if they also provide homeowners’ insurance. Many companies will give you a discount if they have policies for both your home and auto. Your Realtor can also recommend insurance agents to help you with this step. You will need to provide your insurance information to escrow as insurance is a lender- requirement and you will be asked to prepay a portion of your policy as part of your closing costs.
4. Don't Make a Major Purchase or Pay off Credit CardsWhen you were preapproved to make your offer on the property, your lender checked your income, expense, credit, etc. You may be thinking it would be smart to consolidate debt or start buying appliances for your new home-to-be. Don’t do it! Wait until after the purchase is complete before doing these things. If you manage to increase your debt to income ratio, you could put yourself in the position of no longer being eligible for a loan. Even if you make cash purchases, if the amount you spend affects your cash reserves you could be shooting yourself in the foot. If you absolutely must buy or pay off something prior to the close of escrow, make sure you talk to you loan officer about it before you do anything.
5. Don't Change Jobs Unless It's NecessaryLenders like to see a consistent job history, so don’t change jobs between preapproval closing escrow. Sometimes a loan underwriter will simply need a letter of explanation for a job change, but again, talk to you lender before making a move that could jeopardize your home purchase. Underwriters aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the house is yours.
6. Don't Ignore Lender RequirementsKnow what is expected of you and take care of it. You provided your tax returns, banks statements, etc. to you loan officer when you were approved for your loan. That doesn’t mean you won’t be required to submit more information during escrow. Sometimes the underwriter will ask for a more recent paystub or an explanation of a large deposit into one of your bank accounts and require signatures on any number of things. If your loan officers ask for any additional information or paperwork, take care of it right away – completing the purchase of your Silver Lake home on time will depend on it.
7. Don't Overreact if the Appraisal Comes in LowWhen nice, well-priced properties come on the Silver Lake market, there is a good chance there will be multiple offers. If you were in a multiple offer situation and offered above the asking price, or even if your offer did NOT go above asking, there is always the possibility that the appraisal will come in lower than the price that you and the seller agreed on. Should the appraisal be too low, you have these options:
- The seller can lower the price.
- You can bring in enough cash to cover the difference.
- A combination of lower price and bringing in cash.
- Dispute the appraisal- your agent and the listing agent can supply comparable sold properties to the appraiser to help ‘prove’ that the appraiser should bring the price higher.
- Order a second appraisal.
- Worst case - cancel the contract. Normally one of the above steps can resolve the problem, but as long as your appraisal contingency remains in place, you still be able to cancel the contract and have your earnest deposit returned to you.