There Are Do's and Don't Do's While You're in Escrow

By
Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119

There Are Do's and Don't Do's While You're in Escrow

There are do's and don't do's while you're in escrow. But, before we get to the do's and don't do's, let me give a simple explanation of what escrow is. Escrow comes from an old word that basically means a piece or scrap of paper. In real estate, when two or more parties enter into a contractual agreement which involves money, it is said that the agreed upon contract is in escrow. The agreement is typically followed by the exchange of money which is held by third-party who will hold money until the contract parameters are complete.

In real estate, the listing or selling broker is more likely to hold the escrow monies in aEscrow separate escrow account. During the escrow period, the buyer will be working through the lending process and the seller will be taking care of any negotiated repairs and legal requirements necessary for him/her to fulfill his/her part of the contract.

For the buyer, the escrow is especially sensitive when it comes to money. There are definite do's and don't do's during that period. As the buyer is working with a lender, his financial situation should freeze in place on the debt side and improve on the asset side if there are opportunities to do so. What should a buyer do and not do during escrow?

Don't do these during escrow

  • Don't open new credit accounts. The lender will pull a credit report just before closing. Any new credit accounts may affect the credit score of the buyer.
  • Don't take unpaid time off from work. A consistent and steady income is what the lender is basing his assessment of the buyer on.
  • Don't buy a new car, furniture or anything on credit during that period. Every added debt changes a buyer's status.
  • Don't do anything that would require a hard pull on your credit. 

Do these during escrow

  • Do continue to pay all debts on time or in full if possible.
  • Do pay all debts on time or before their due date. I had a contract fall apart a few days before closing because a buyer failed to pay a mortgage payment on time in the month of closing.
  • Do collect any gift letters from participating family members. Sometimes, a family member will gift down-payment or closing cost funds to a buyer. There needs to be evidence of the funds existence and a gifting letter should be on file to confirm that the funds will be available at closing.
  • Do continue to show up for work and deposit paychecks to show a pattern of employment and income.

I always encourage my buyers to freeze in place. Don't do anything that will have a negative affect on their contract. They need to continue to do the positive things they have done that caused them to be qualified for their loan in the beginning, and they need to avoid anything that would negatively affect their purchases. There are definite do's and don't do's while you are in escrow. Knowing which ones to pay attention to can make a home purchase a breeze.

When you're ready to make that home purchase, give Cornerstone Business Group, Inc., a call and we'll help you navigate the process. We are your local real estate sales pros.

There Are Do's and Don't Do's While You're in Escrow

 

This post was originally published at www.winchestervarealestate.com; There Are Do's and Don't Do's While You're in Escrow. #mikecoopersellshomes, #cornerstonehomesales, #winchesterhomesales, #yourlocalrealestatesalespros.

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Ambassador
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Hi Mike

This is such important advice for buyers during their transaction. It's not uncommon for them to think it's a done deal with regard to their loan and to start spending money to get their new home furnished, etc.

Jeff

Sep 07, 2016 03:14 AM #1
Rainmaker
2,655,440
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Excellent tips for those in the process of buying, Mike!  LIke Jeff Dowler points out, it's not unusual for homebuyers to go out and run up dept on furnishings for their new home.

CONGRATULATIONS on having this blog FEATURED in the Old Farts Club group!    

Sep 07, 2016 04:07 AM #2
Rainmaker
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Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

I like that expression, Mike, "freeze in place." I have a document that I give my clients called "Don't get into a pickle" which essentially covers your points.

Sep 07, 2016 05:03 AM #3
Rainmaker
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Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Mike, I've had my share of challenges when it comes to buyers and escrow, I even give buyers a list of what to do and not to do once in escrow. They just forget. Great post!

Sep 07, 2016 05:12 AM #4
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Mike - Great advice. Both our lender and we make a point of discussing this with every buyer client early and often.

Sep 07, 2016 06:09 AM #5
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Florida Tolbert Team Keller Williams Advantage
Keller Williams Advantage III Realty in Lake Nona - Orlando, FL
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Basically don't do anything to change your credit score or credit report until you close on the home. 

#floridatolbertteam

Sep 07, 2016 11:56 AM #6
Rainmaker
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James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Good morning Mike.  I looked and did not see this one as a feature, their loss.  Very good information for potential buyers, thanks

Sep 07, 2016 08:09 PM #7
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lepong aja
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i like.

Sep 12, 2016 11:49 AM #8
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Mike Cooper, GRI

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