How Long Can It Take To Close Escrow?
Finding the house that you want to buy is only half the battle. After finding your dream home, you have to go through an extensive closing process before you can finally move in.
One major aspect of buying a home you should be familiar with is the escrow process. This period during the closing process can be pretty overwhelming, so you should be prepared to deal with it when the time comes.
Essentially, escrow helps protect both the buyer and seller during the closing process. It ensures that both parties are satisfied before the transaction is complete.
Let’s take a closer look at what escrow is and how long the escrow process can last.
What is Escrow?
Escrow is simply a financial agreement in which a third party holds funds while two parties work to complete a transaction.
In the home buying process, a third party holds the money being used to purchase a home while the buyer and seller satisfy each other’s terms before closing. Payment is only released once both parties are satisfied and ready to close the deal.
How Escrow Works
The escrow process is basically as follow
- First, the buyer and seller agree to purchase terms, which includes agreeing on which third party will hold the money for the transaction.
- The buyer deposits money into an escrow account to be held until the transaction is completed.
- The buyer and seller satisfy all of the conditions of the transaction.
- To complete the transaction, the funds from the escrow account are disbursed.
This is essentially how the escrow process plays out. In a real estate transaction, things like home inspections, repairs, and more are completed while the money is being held in an escrow account.
Why Escrow is Important
The escrow process is very important for one primary reason: protection.
As a buyer, you don’t have to pay the seller anything until all of your terms have been satisfied. After getting a home inspection, requesting repairs, and setting any other terms or conditions, you can safely deposit your money to a third party while the seller accommodates your requests.
As a seller, escrow ensures that you won’t have to spend any time or money to satisfy the buyer’s conditions only to end up not receiving payment.
How Long Does the Escrow Process Take?
To put it shortly, it depends.
In order to complete the escrow process, buyers and sellers have to satisfy all of the terms of their purchase agreement. This includes things like home inspections, pest inspections, disclosures, securing financing, and more.
That being said, the escrow process can take as little as five days or as long as two months.
There are a number of things that could delay the escrow process, including:
- Delayed loan approval
- Your payment method
- The seller’s chosen disbursement method
- New liens on the home
- Expired mortgage offer
- Poor communication
- And more
These issues, among others, can be the difference between closing your real estate transaction in a week or closing after several months.
The most important thing to do when trying to get through the escrow process is to be in constant communication with your buyer or seller.
By being prepared for this process, you can move into your new home as quickly as possible.