Buying a home comes with a lot of confusing steps that often intimidate new buyers. If this is your first time going through the home buying process, you might be concerned about escrow. The good news is that this is the home stretch of the process, and your home is closer than you think.
It feels like forever when you’re waiting for the keys to your new property, but the time will fly faster than you think. This article will define the escrow process so you know what to expect when buying a home.
What is Escrow?
In the world of home buying, escrow is the holding area where the money and contracts are secured until your home is closed. Before the title to your home is physically in your hands, it’s kept with an escrow officer. This officer is a third-party, and they’re usually from the closing company or title company (some states require this to be an attorney).
You’re probably asking why a third-party needs to be involved at all in your home buying process. Simply, it’s for the protection of the buyer and the seller. They make sure everything goes smoothly during the closing process. They protect things like your money and your contracts until it’s time to finish the process completely.
All of your documents will be filed with the escrow officer while you handle your closing. This might include things like home inspections or repairs that need to be done by either party. Finally, when all the conditions for selling are met, the money is transferred to the seller while the records or title is given to the buyer.
Why Escrow Protects Buyers and Sellers
While it might sound like a pain when you’re in the moment, escrow actually servers both the buyer and seller in a big way. The buyer benefits from the escrow by being able to make sure contingencies are met before their money is transferred to the seller. For instance, if the seller agreed to fix a problem with the plumbing, escrow will ensure these funds aren’t transferred until those repairs are complete.
It’s not just the buyer that benefits from the escrow process. Sellers also have the added peace of mind of knowing there’s a security deposit in case the buyer backs out at the last minute. This can be anywhere from 1-2% of the cost of the home which is held in escrow. If the buyer backs out without any real reason, this deposit is then given to the seller for the failure of the sale.
Think of the escrow process as a way to make sure the home sale is done correctly and with consideration for both parties. It also includes a third party who is able to check all documents, contracts and funds are secure and dealt with properly the first time.
Yes, it’s frustrating as both the buyer and the seller to wait for the completion of the escrow process. It’s time-consuming and costly, but it’s also a necessary part of buying a home. It’s there for the protection of both the current homeowner and the new one. It doesn’t affect your home buying process in any way except by making it more secure and reliable for everyone involved.
Have you ever thought about your house potentially violating any codes? You may have recently replaced an air conditioning unit, added a backyard deck, etc. It may be possible that the new additions to your home may be in violation of building codes or HOA in your town, city, or county. Although it may not be something you have thought about before, selling your house with code violations can be more problematic than you think.
Is Your House Is Up to Code?
To determine this, unfortunately most city municipalities have a set of building codes that you have to abide by. These codes they use are to help with safety and help prevent damage or health issues. This is ultimately a way to look out for occupants of homes, apartments buildings, and any other residence. Theses specific rules however, vary depending on the municipality, structure, and type of work done.
If you own a new home, there’s a good chance that it is already up to code. New home builders often have local inspectors watching over them and making sure the work they’re doing meets the codes of the city, county, etc. As you alter, change, or add on to the residence the code violations might be coming with that. That could be a problem if and when it comes to selling your home. So, in case you are wondering if and how you can sell your home with all of these issues, there are a few solutions to prevent this before selling your home.
Bring Your House Up to Code
The best way to make sure that your house is up to date with code violations is to hire a general inspector to take a look at your house and see any potential code violations, if you have any.Most times, inspectors aren’t looking specifically for code violations but they will look for any hazardous electrical wires, piping leaks, and anything else that may turn into a problem. The truth is that it’s unlikely anyone can keep you from selling a house with certain code violations.Most mortgage companies will have an inspector take a look and if they see too many code violations they may not want to loan on the house.
Sell the Home with Violations with Value Cash Offers
Technically, you could sell the home as-is on the open market as long as there are no clear code violations that presents any danger to the home. If you decide to sell the home as-is with any potential code violates the buyer will take on that responsibility.
The buyer is going to want contingencies and credits for the work they know they’ll have to do and that’s coming directly out of the sale price. To avoid the headache with negotiations going back and forth with the seller, you can call us here at Value Cash Offers and we will help you sell your home!
Starter homes are no longer really cheap and widely available. These small yet comparably affordable homes are getting scooped up left and right. Apartment-weary millennials and baby boomers looking to downsize now that the boomerangs seem to have permanently left the nest for good are driving the prices of starter homes that much higher. Some are beginning to question whether these diminutive living spaces are worth the money.
Should You pay for a Starter Home or Save for Something Better?
Every home-seeker will have to crunch the numbers and weigh the pros and cons of buying a home like a starter one or saving for something larger. Those who are single and those who have no intentions of starting a family in the short-term will likely find a starter home to be worth the money. However, it might not make sense for a newly-married couple to buy a starter home if they plan on starting a family in the upcoming years. Couples looking to add to their family would be better served saving for a larger home or taking out a larger mortgage for more spacious digs to accommodate their children.
Are Starter Homes Worth the Elevated Prices?
Even those who are single or in a relationship without plans to have a family are questioning whether starter homes are worth the lofty prices. Today’s starter homes are approaching the price tags of the family homes of yesteryear. Does it really makes sense to take out a substantial mortgage to finance such a small house? After all, there is no guarantee the real estate market will remain strong. If home prices dip, the investment could lose value and make it that much more difficult to segue to a larger home at the desired time and price.
You Can’t Time the Market to Perfection
There is no sense in trying to time the real estate market as it is unpredictable. If you have been waiting on the sidelines for a while, hoping the price of your “forever home” finally dips, beware that the wait could continue. There is no guarantee the forever home you have your eye on will stay the same price or decrease in price in due time. The market could continue to climb, making it that much more challenging to snag that forever home.
If you intend on transitioning to such a forever home within a year or a couple years of your move to the starter home, you should give serious consideration to skipping the starter home altogether. The moral of this story is few succeed in timing the market to make a seamless and profitable transition between starter and forever homes.
Consider a Happy Medium
Crunch the numbers on the starter home and forever home you have in mind. Once you have determined the exact price difference between the two homes, consider how many years it would to take to save that amount of money. If you can save up the difference between the two homes’ prices in a year or two, it might make sense to buy the forever home right now. If it would take half a decade or longer to save up the difference between the two homes, it makes more financial sense to opt for the starter home.
When a couple lives together it can be confusing as to whose name should be on the mortgage. Maybe you want to split the mortgage to create equal ownership, but that might not always be the best route. Owning a home is a major investment so knowing the facts is extremely important. Let’s start to lay out some mortgage facts so that you and your partner can rest easier.
Title vs mortgage
The title is in relation to who owns rights to the property. A mortgage is an agreement to pay back a loan to lenders. Homeownership strictly falls under having your name on the title and not the mortgage.
Not being named
If you’re not named on the mortgage or title then you are at a major disadvantage when it comes to homeownership. Legally speaking when this happens you have no ownership of the home. If you are taken to court at this point then you will have very little rights to any part of the property. You might not be on the mortgage payments but be sure to be on the title of the home if you want any stake in ownership.
Title of the home
Let’s say you decide not to have both names on the mortgage but are concerned about home ownership. Well, as mentioned before you have the option be on the title of the home which will grant you many rights legally. Doing this as you close is the best option if you want to avoid the headache of doing it later. Once your names are on the title then congratulations on both being homeowners!
However, if your name is not on the title and things go sour between you and your partner then you can end up technically homeless. Any money you put into the home would be gone and you’d lose any rights. Another sad example would be if your partner dies and they were the only one on the title then you can be in for a major legal headache. Save yourself the stress and get on the title.
Name on mortgage
It may sound like a sweet deal to be on the title but not on any of the mortgages but that can end up sour too. When whoever stops paying the mortgage who do you think the lenders will be coming to? Yep, that you and they will take high notice if you’re close to foreclosure.
What if you’re just making mortgage payments? Well, then you could be really prone to taking some damage. The owner of the title could end up selling half the home to someone you don’t know to leave you paying the mortgage for a homeowner you don’t know. Is that likely? No, but it can happen so why leave yourself vulnerable?
Getting your security deposit back at the end of a lease in a timely manner at the end of a lease can sometimes feel like an impossible feat. However, if there were no significant damages to the place you were renting, it doesn’t have to be. As a tenant, you have rights. If you follow these steps, you can put all the chances on your side to get your security deposit back quickly.
1. Study your contract before moving in
How to get your security deposit back starts before moving in. Your lease should indicate everything you need in order to get your security deposit refunded, including the steps you will have to follow before moving out (do you need to fill in any nail holes or clean the carpets for example). It should also mention how long your landlord can keep your security deposit after you move out.
Keep a copy of your contract in a safe place and don’t hesitate to refer to it any time you want to make an improvement.
2. Document every step
If any dispute arises between you and your landlord, documentation will be key. Taking the extra step to record everything might be a hassle, but it can save you a headache and a lot of money in the long run.
Start by doing a video recording or taking pictures of any damage during your moving-in inspection. If you notice anything amiss after moving in, email your landlord immediately and snap a picture.
Keep a record of any damages and repairs during the life of your lease and make sure that you have a written proof as “normal wear and tear” can sometimes be a subjective notion.
If you want to make any changes, even one that you might consider would improve the value of the rental like repainting the walls or changing an appliance, check with your landlord first.
3. Be aware of the tenant-landlord laws in your state
Laws vary from state to state, but your landlord is not allowed to keep your security deposit without a valid reason. Check your state’s attorney general website and the U.S. Department of Housing and Urban Development to see which ones apply to you.
Keeping any communication with your landlord by email or following a conversation by an email is a good way to avoid any misunderstanding and keep a written record should the need arise.
4. Plan your move-out carefully
Before moving out, check your lease to see how much notice you must give your landlord: most states require a 30 days’ notice and to send it by certified mail with return receipt requested.
Deep clean your apartment as best as you can and proceed to small repairs. It is always a good idea to be proactive by protecting the bottom of your furniture with felt pads and avoid hanging things with nails whenever you can for example. If you are on good terms with your landlord, it might be a good idea to have a preliminary meeting with him or her to inspect the unit and set up a check-list of repairs that might be necessary.
Before leaving the apartment, take detailed pictures to document the move-out condition of the place.
5. Follow up with your landlord
In most states, your landlord should return your security deposit within two to three weeks and provide an itemized list of what your deposit will be used for if applicable (cleaning, repairs, back rent…) if applicable by mail. Always make sure to provide your landlord with a forwarding address so he or she can get in touch with you and you can get your security deposit back in a timely manner.
It is easier and cheaper to negotiate directly with your landlord if there are any disputes. However, if reaching out fails, you might need to take it a step further and sue your landlord in Small Claims court.
6. If all else fail, sue in Small Claims court
Small Claim Court (sometimes also known as Justice of the Peace, Conciliation, Justice, City, or County court) concerns claims with a limit usually between $3,000 and $10,000 depending on the state. It requires a small fee of $10 to $50 to fill a claim and is an expedited process, not requiring a lawyer.
However, all the documentation you will have gathered will be instrumental in getting your security deposit back.