Congratulations! You are now ready to buy your new home in Vancouver, WA. However, before the keys are handed over to you, there is a significant process known as “escrow” that you must undergo. The escrow process is complicated, and as a homebuyer, it is important to understand what it entails. In this blog, we will provide you with a detailed overview of the escrow process for homebuyers in Vancouver, WA.
1. What is Escrow?
Escrow is a legal process that is designed to protect both the buyer and seller in a real estate transaction. The process involves the use of an independent third party, known as an escrow company. The company holds the funds until all the agreed-upon terms and conditions of the contract are met. The escrow process begins once both parties agree on the terms and conditions of the sale.
2. How does Escrow Work?
The escrow company acts as an impartial third party that collects and holds funds, documents, and instructions from the buyer and seller until the transaction is successfully completed. The buyer must deposit an earnest money deposit (EMD) into the escrow account. This amount is usually 1-3% of the purchase price and indicates the buyer’s good faith and intent to purchase the property. The escrow officer will then review the terms and conditions of the contract to ensure that both parties comply with the agreed-upon terms.
3. Title Search and Home Inspection
The escrow company will initiate a title search to determine whether the property is free of any liens or judgments that could affect the transfer of ownership. The buyer may also decide to have a home inspection done to ensure the property is in good condition. Any issues discovered during this period can be addressed accordingly, including negotiating repairs or canceling the sale altogether.
4. Closing Process
Once the title search and home inspection are completed, and the buyer’s financing is secured, the escrow officer will prepare the final closing documents. The documents include the deed of trust, promissory note, and the closing statement or HUD-1 Settlement Statement. The buyer and seller will need to sign the final documents, and the buyer will have to pay the remaining amount plus interest and closing costs. Once they have been paid, the escrow company will distribute the funds accordingly, and the title deed will be transferred to the buyer.
5. Escrow Fees
The escrow process comes with fees charged by the escrow company for their services. The fees vary depending on the purchase price of the home and the complexity of the transaction. Typically, the buyer and seller split the escrow fees equally.
The escrow process is an essential part of the home buying process, and it’s critical that homebuyers understand what it entails.
By understanding the escrow process, buyers can rest assured that they are well-protected in the transaction. With the knowledge provided in this blog, we hope that buyers can enter into the escrow process with confidence, knowing what to expect, and being able to ask questions of their escrow agent. Here’s wishing all homebuyers in Vancouver, WA a stress-free and seamless home buying process!