10 THINGS TO KNOW IF YOU’RE CLOSING A HOME DEAL FOR THE FIRST TIME #1. Open an Escrow
The first step to closing the deal and unlocking the front door of your own house is to open an escrow. An escrow is a contractual arrangement in which a third party receives and disburses money or documents for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties. Escrow, on average, will last approximately one month. During that time, the third party is taking care of transactions on both the seller and buyer’s behalf. For example, if you’re providing an inspection as a buyer, you deposit funds to the escrow account. Costs of this service are to be negotiated beforehand. Be conscious of the escrow company’s fees. Some contain unexpected fees you might only become aware of during payments, because they’re hidden. Understand escrow company fees before The price for a mortgage loan is typically expressed as “points” paid to get a certain interest rate. Points are essentially prepaid interest, so the more points paid, the lower the interest rate. One point equals 1% of the loan amount. A mortgage rate lock guarantees that a mortgage lender that will give a buyer a certain interest rate, at a certain price, for a specific time. A rate lock protects the borrower from rising interest rates in the period between sales agreement execution and closing (often a month). If the buyer locks in a rate of 4.5%, she will only have to pay 4.5% interest even if rates rise while going through the loan application process. A rate lock is commonly good for 30, 45, or 60 days, though that time period can be shorter or longer. After that period expires, the buyer is no longer guaranteed the locked-in rate unless the lender agrees to extend it. This is why arranging a prompt closing is crucial. entering into an agreement. #2. Lock in the Interest Rate
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