Real estate has its own jargon, and you’re probably hearing a lot of new terms is this is your first time buying a house.
One term you will likely hear about is “escrow.” What does it mean?
Buying a house can be broken down into a few key steps
Escrow means you put money into a neutral third-party account for safekeeping. It provides you and the seller with security. Here is where it fits into the process:
1. Get a pre-approved mortgage. This gives you an idea of how much you can borrow and shows sellers that you’re serious about buying.
2. Hire a real estate agent. They know how to find houses that fit your criteria and can negotiate a deal on your behalf.
3. After you have found the home that meets your criteria and fits your budget, have your agent submit an offer. It may be accepted or rejected, or the owner may return with a counteroffer.
4. Once a price has been agreed upon, you may need to make a good-faith deposit, which shows the seller that you are serious about buying the house. At this point, an escrow account is opened, and an independent third party holds the money, along with any legal documents.
5. After the home inspection and mortgage paperwork are complete, a closing date will be scheduled.
6. The closing paperwork is reviewed and signed. At that point, the escrow holder, also known as a settlement agent, disburses the funds.
7. You receive the keys to your new home and start moving in.
It may feel like the whole house-buying process is long and complicated. As a home buyer, you should have someone who will guide you through the process, review the necessary paperwork and protect your interests.