There are several complex steps involved when you buy a home, including the final step known as escrow, which can sometimes be confusing for prospective homebuyers. If you are looking into buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to learn more about the steps to becoming a homeowner, Foundation Mortgage is here to help. Read on to better understand the escrow process.
What Is Escrow?
During the sale of a home, there is a substantial amount of funds being transferred. In order to approve the funding, many financial agreements must be made. Escrow exists in order to ensure that the agreements made by both the buyer and seller are met. One of the principal purposes of the escrow process is to guarantee that a homebuyer has sufficient funding to complete the purchase and that the money will be issued to the seller at the time the title is transferred. Additionally, escrow guarantees that a seller has resolved issues with the home so that a buyer does not experience any incidents.
What Happens During the Escrow Process?
When a buyer puts down an offer on a home and it is accepted by a seller, that agreement is then placed in escrow. Escrow is essentially a financial construct involving a third party that oversees and temporarily holds the payment of funds between two parties who are in the process of completing a financial transaction. Its primary function is to protect both parties from any financial losses. Both the money and the documents dealing with the transaction are held in escrow to ensure that each party fulfills their obligations. An unbiased escrow officer safeguards the money and ensures an appropriate allocation of funds until both parties come to a sales agreement.
Better Understanding the Escrow Process
The escrow process officially begins when the seller and the buyer both agree to the transaction terms. Then, each party submits the property, the money, and any required paperwork into an escrow account. Both parties will have time to review the terms of the agreement and make sure that they are satisfied with the arrangement. A third party escrow company will subsequently notify the seller and the buyer when the money, property, and documentation have been delivered to the satisfaction of both sides. After an agreement has been reached and everything has been reviewed, the funds are then released and the deal is finalized.
Get Assistance During the Escrow Process
Buying a new home is an exciting, yet complicated undertaking, and the escrow process helps to ensure that everything runs smoothly during the homebuying process. If you are interested in buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help. Contact us today for a consultation.