At this point, you have found the home you wish to purchase, and your offer has been accepted — congratulations! This article covers closing on a home, the sixth step in How To Buy a House. The entire series is an essential read and a great source of information. Here, we answer the questions:

• What is escrow?
• What does the timeline for closing on a home look like?

What Is Escrow?

The escrow process describes all the things that need to happen between the time the seller accepts your offer, and you get to move into the house of your dreams.

The first part of the escrow process is the opening of an account in which deposits and any other payments can be held. During this process, the buyer and seller turn in all the paperwork and supporting documents and provide funds to a third party. As a buyer, you obtain bank approval, secure the loan, complete the inspections, purchase homeowner’s insurance, complete a final walk-through, and go through the closing process.

As the buyer, you can walk away from the agreement if your offer included contingencies that  are not met or there is a problem with the property.

Steps To Buying a Home: Closing Timeline

Closing on a home can take 30 to 45 days in Hawaii, beginning on day 1 when you pay the earnest money deposit. The process ends when your lender funds the loan and, two days later, you get your keys.

Although every closing may look a little different, here is a sample timeline following the seller’s acceptance of your offer:

Day 1. Things move quickly and you can take the opportunity to get several processes going. Pay the earnest money deposit, schedule a home inspection, and notify your lender that you have an accepted offer.

Day 3. By this time, you have shopped around and selected a lender. Complete and sign your loan application, potentially with the lender that provided your pre-approval letter.

Day 7. Within the first week or so, you’ll receive the disclosures. Try to review and return them within 10 days to avoid delays. During this time, you should also get the title report showing there are no unknown claims or liens on the property. With a clear title, insurance companies can issue home, flood, and hurricane insurance, as needed.

Day 12. Schedule the home inspection as quickly as possible. Depending on the results, you can negotiate with the seller to fix any major defects. Additionally, the buyer usually pays for the appraisal required by most lenders. The lender chooses the appraisal company and schedules the appraisal after you pay for it. You’ll need to take care of this as quickly as possible to avoid delays with your mortgage loan.

Day 20. If you are buying a condo or home in a development, you’ll have to review the condo or homeowners’ association documents. Typically, you’ll have to sign and agree to them within 10 days.

Days 21-28. You will receive survey results and ensure there are no encroachments. An encroachment occurs when a property owner builds a structure such as a garage, fence, or shed over the property lines.

You’ll also receive a conditional loan commitment letter. The lender may request additional information or explanations about your finances. Respond quickly to avoid any delays.

Day 29 (or before). It’s time for a final walkthrough to ensure the seller has met all the conditions agreed upon.

Day 30. It’s finally closing day! You sign the loan paperwork and make the down payment via cashier’s check or wire transfer from your bank. Finally, the escrow company files the purchase paperwork with the state.

Day 32. Get the keys and start moving in!

In the market for an amazing realtor on Hawaii Island? Contact Jade Halama today.