Posts Tagged ‘escrow’

Preparing to Buy: Getting Finances in Order

You’ve been pre-approved, and you’ve been shopping with your Realtor. She’s encouraging you to write an offer on that cute little house you saw today. “When do I need to have my funds available?” you wonder. Some funds need to be available right away. An earnest money deposit, or “consideration,” is part of writing a real estate purchase contract, and you are expected to put a check with the offer you write. Your agent will collect a check from you, usually up to 3% of the purchase price. If your offer is not accepted, she will return your check to you. Once your offer is accepted, she generally has three days to deposit that check into an escrow account for you. This money becomes part of your down payment.

In addition to the remainder of your down payment, you will need cash for closing costs. These costs may include escrow charges, title insurance, lenders’ fees, the transfer taxes that are collected when a property changes owners, prorated property taxes and various small fees. Both buyers and sellers have closing costs. Who pays for what depends upon the terms of the contract and the county in which the property is located. The money for closing costs is brought in with your down payment, shortly before your escrow closes and you become the new owner of the home.    

“Okay, so I need money when I write my contract, and I need my down payment and closing costs just before my escrow closes. Do I need to have any other money available during the escrow process?” I’m glad you asked! Yes, probably so. While the deposit, down payment, and closing costs are most of the money you will need to bring in to purchase your new home, you may have to pay “up front” for the appraisal the lender requires. Of course if you’re paying cash for your home, an appraisal would be optional. Also, you may wish to have inspections made on the property you are buying. Most inspectors give us the choice of paying for an inspection at the time of inspection or having the cost of the inspection billed to escrow. In the latter case, the fee is higher. Questions? I’m here to help you.