Escrow: What is it, And How Does It Work?

Aug 30, 2021, 17:08 PM

If you’ve ever considered purchasing a home, you’ve probably heard about the escrow process. In a real estate transaction, escrow describes the period of time after the buyer and seller have signed the purchase and sale agreement but before the funds have been transferred to the seller and all paperwork has been finalized. The escrow period provides time for the buyer to investigate the property—known as due diligence—before purchasing the home, essentially protecting their funds if they find an issue with the property and wish to back out of the purchase.

Escrow: What is it, And How Does It Work?

When a house sells, and payment for that property is placed in a third party, like a bank, for safekeeping pending a promised action by either the seller or buyer. The typical escrow period is 30 to 60 days, but it can vary by transaction. For example, if no finance contingency is required, the escrow process may be expedited. However, in a case where a home inspector finds a problem that requires repairs, the inspection process may be longer. Read more about the Role of Contingencies in Escrow in Metro’s Save and Succeed. Finalizing your mortgage can be the most time-consuming during the escrow process. By completing a pre-approval with your lender, you can skip many of the steps required to getting a loan, effectively expediting the timeline to closing on your home.

The critical thing to remember about the escrow process is its primary purpose

Giving the buyer time to conduct their due diligence before fully committing to the investment they are about to make. By educating themselves on the escrow process, homebuyers can feel prepared and better protected in case their due diligence turns up any unpleasant surprises. For more information before going into escrow on a real estate purchase, read more from Metro’s free resource Save and Succeed.

Home Sales

As summer home sales slow, a fall purchase could be ideal for cash-strapped home buyers. There are fewer buyers in the fall and that may give a buyer more room to negotiate. Sellers may start feeling desperate, especially those who want to sell their homes and get a tax write-off before the end of the year. Buying a home is probably one of the most significant investments you’ll ever make. It should be a fun process, but it’s important that you cover all your bases. There are questions to think about for purchasing a home to make sure it is financially feasible.

  • Can you pay the up-front costs of purchasing a house?
  • Can you afford the ongoing monthly mortgage and other living expenses such as utilities and groceries?

Metro Credit Union in Omaha, Nebraska

Metro has a wide range of calculators for you to use to determine some preliminary answers. Plugin your figures and see if it all adds up. Most professionals would recommend that anyone searching for a home to purchase should obtain a pre-approval. Learn more about the mortgage pre-approval process and understand other basic terms of a mortgage transaction. The mortgage team at Metro Credit Union mortgage can help you navigate your homeownership dream. Metro Credit Union Mortgage is the home lending side of Metro Credit Union. Buying your first home is a big step, but it doesn't have to be a scary one. The more you know about purchasing your own home, the more confident you'll feel about making these important decisions that will shape your future. When you're in the market for a home loan, you know you can trust your credit union to provide a great rate, great service, and all with fewer and lower fees. And, we've got you covered with a wide variety of lending options.

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