Buyers, Finance/Lending

Understanding the closing escrow process. It can be a fire drill!

Understanding the closing escrow process...... It's a fire drill!Understanding the closing escrow process. It’s a fire drill!

Understanding the closing escrow process is going to help you be prepared for what can be either a very smooth few days or a fire drill.

Why?

Well, when escrow opens, everyone gets their job done.  Escrow dumps out a whole bunch of paperwork, and you get to read and sign it all.  So we’re moving along in the transaction and we’re all doing our jobs right?  Inspections happen, the loan process begins, disclosures reviewed and signed, etc.

We as your agents have submitted everything required and you have done all that you’ve been asked to do.

Right.  And then the escrow officer and lender wakes up, it’s the eleventh hour and all hell breaks loose.

The following is an accounting of what happens during the final hours.

Understanding the closing escrow process.

The last 3 days of your escrow!

1. Well almost everything is completed in the first couple of weeks. In fact, if you are paying cash we can close an escrow or complete a transaction in less than 4 days.  But if there is a loan,  (most of us don’t have hundreds of thousands of dollars on hand  to buy a home). You and I borrow it.  And that process takes time.  The lender, loan officer and underwriter all have a hand in what happens during the entire loan approval process.

def:

Lender= bank, credit union or  other funding institution.

Loan officer= the person you actually meet and work with on a daily, sometimes hourly basis who completes your loan application

Underwriter= some one whose job it is to make the your file legally and financially complete in every way.  In other words, all the i’s are dotted and t’s are crossed.  This person’s ID# is attached to your file.

2. The final loan preparation happens within the last 3 to 4 days and this is where the Underwriter can toss in that big monkey wrench they have kept under their desk just waiting for this moment.  So now is when they take their final look at your application and begin to ask questions, check on your bank accounts, your funds, etc.  And if anything is out-of-place, the process STOPS!  Which is why…….

3. Loan docs consistently arrive late.  See #2 above as one reason or it’s because the borrower didn’t get the requested information to the loan officer on time. Lets call it lack of communication or failure to follow through.

This is what happens in the last 3 or 4 days.

1. Once the loan package has arrived the escrow officer reads the entire package and must follow it exactly to a “T”.  (A loan package is averages 12 to 24 pages)
2. The HUD statement finished. This is the final accounting report for your transaction
3. The estimated Closing statement, (HUD1) is sent for approval from the Lender, Buyer’s agent and Listing agent. It must be approved by all.
4. Escrow ensures the loan package is fully executed or signed by all parties.
5. The loan package goes back to the lender for final approval (Fingers crossed here)
6. Recording package is prepared for the county clerk
7. Escrow package goes to the lender so funding is approved.
8. Lender approves funding amount and the entire package.
9. You wire in your funds by a certain date (hopefully you did)
10. Upon receipt of the wired money and final instructions, escrow instructs Title to set the property up to record at the county recorders office.
11. On recording day, escrow contacts Buyer, Seller, and all agents of confirmation.

This is just a rough outline and I probably have forgotten some steps. There can be dozens of calls, many of which you never receive.

All deals vary but this and more is done by a good escrow officer in the last 3 days!

Pretty remarkable.

This is why when we have a good one as in Sunset Escrow, we love them and thank them for doing a very difficult and tiring job.

 

Please have a look at some of the latest listings in Rancho Mirage, Palm Desert and La Quinta then call us at 760-413-2871.  We’d love to talk to you!

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