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The escrow company is a neutral third party responsible for preparing documents necessary to transfer clear title to the buyer, recording the mortgage and making sure funds are transferred to the seller. The escrow process begins when your earnest money is deposited and the purchase and sale agreement is delivered to the escrow company and ends with the closing of the transaction.
An appraisal is an estimate of the value of a property by an independent, licensed appraiser. Your lender will need an appraisal in order to approve your loan.
A title search is the process of reviewing court and other recorded documents related to the property to ensure that there are no liens or claims against the property you are buying.
Title insurance insures the lender and/or buyers against the possibility of unknown liens or discrepancies in ownership on the property they are purchasing. Sellers buy title insurance for the buyers, covering the amount of the purchase price; buyers buy title insurance so their lender will be covered for the full value of the mortgage. This is a one-time fee that is paid at closing.
Your homeowner’s insurance policy should cover the cost to rebuild your home. This insured amount may be higher or lower than the actual purchase price as long as it meets the loan requirements. The insurance company you choose can give you an actual quote based on specific information about the property.
Most standard homeowner’s policies do not cover loss due to flood. The law requires that if your home is located in a Flood Hazard area you must obtain flood insurance. If you choose, you can obtain flood insurance coverage even if you are not required to do so by your lender. The law requires lenders to order a flood hazard determination on all properties securing a mortgage.
Again, earthquake insurance is not included with standard homeowner’s policies. If you are interested in getting earthquake insurance, ask your insurance agent about it specifically.