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What else should I know?

Hazard and flood insurance
Your lender will require a hazard and, if applicable, flood insurance policy naming the lender as the Loss Payee. It is to your advantage to shop around for the best rate. Once you have placed your insurance, instruct your agent to call the escrow officer, as there will be additional information required in order to complete the policy.


Prepaid Interest
Interest on a real estate loan is paid in arrears. For example, if the lender funds on July 10, interest is collected from that date to August 1. The first payment date is September 1, which will collect the interest from August 1 to September 1.


Funds to close escrow
Assembly Bill 512 (Good Funds Bill) effective January 1, 1990, states that a title company may only make funds available for monetary disbursement in accordance with certain guidelines. Since disbursement cannot be made until the documents are recorded, the title company must wait the mandatory time period as stated in the Good Funds Bill. Waiting periods are: wired funds are considered immediate credit, cashier or teller’s checks must be deposited one (1) business day prior to recordation and any other type of check deposited for closing must be cleared prior to recording which can delay the close for up to 10 days.


Close of escrow
The signing of the loan documents and escrow instructions is not considered the closing date. After the buyers sign the loan documents, the escrow officer must package and return them to the lender for their review. Thereafter, the lender may typically take 24 to 72 hours to review and fund the loan. Provided all necessary documentation and additional earnest money deposit has been handed to escrow holder, the lender will be requested to disburse their loan funds. The day after the lender deposits their funds, escrow causes the original documents, such as the deed and/or deed of trust, to be recorded. The recordation day of these documents is called the “Close of Escrow.”


Power of Attorney
If any of the parties will not be available to sign the escrow instructions, deeds and/or loan documents, notify your real estate agent, lender and escrow holder immediately. Most lenders and title companies will accept a Power of Attorney, however, it must always be pre-approved by the lender and title company prior to close of escrow.


Title vesting
Your escrow officer, lender and real estate agent should be made aware of how you wish to take title. Determining the title vesting is an individual concern and, for tax purposes, should not be taken lightly. If you are unsure of the different options for your situation, consult with your attorney or tax accountant. Neither your real estate agent, lender or the escrow officer can advise you on this matter.


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