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      • id33
      • slughow-does-escrow-work-when-refinancing
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      • autor_nameLightspeed Escrow
      • titleHow Does Escrow Work when Refinancing?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/how-does-escrow-work-when-refinancing" }, "headline": "How Does Escrow Work when Refinancing?", "description": "Are you refinancing your home and wondering what will happen with your escrow account? Read the article to learn how escrow works when refinancing!", "image": "https://lightspeedescrow.com/files/blog/1356ffd1-b850-4e81-8316-76b578c81777_real-estate-agent-offering-refinancing.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-12-09", "dateModified": "2022-12-09" } </script> <p>Becoming a homeowner comes with a fair share of big financial decisions. <em>Sometimes, opting to refinance your home after some time is the best way to make sure you are getting the most favorable terms on your mortgage</em>. But what happens to escrow once you refinance your mortgage?</p> <p>Escrow is a significant part of the home-buying process, and understanding it in its entirety helps you realize its importance. So, today we will answer the question, ''How does escrow work when refinancing?'' and help you comprehend what happens with your funds during this process. If you want to find out what you can expect when refinancing your home, keep reading.</p> <h2>How Does Refinancing a Home Work?</h2> <p>Refinancing a home means getting a new mortgage to replace the old one. This can be a good idea if you want to get a better interest rate or change the length of your mortgage. When you refinance, your old mortgage is paid off, and the new one starts. Part of this process includes putting money into escrow.</p> <p>When you refinance your existing mortgage, the new lender pays off the balance of your old loan. The remaining funds are used to finance a new loan with more favorable terms. After that, the process of how escrow works is similar to when you initially purchased your home.</p> <p><strong>A new escrow account will be established with the new lender</strong> who is responsible for collecting your monthly payments. The funds are then used to pay off your insurance premiums, property taxes, and other fees.</p> <h2>When Should You Refinance a Mortgage?</h2> <p>Refinancing a mortgage is an attractive option for homeowners who want to gain access to better terms and save money. Some common reasons you might opt for refinancing are:</p> <ul> <li>You can get a <em>lower interest rate</em> than your current one. Many lenders say that reducing the interest rate by 1% is enough reason to refinance a home, while others advise to only refinance your home if you can reduce the interest rate by 2%.</li> <li>You have the opportunity to take out a different loan that would <em>shorten the term of your loan without big changes in your monthly payments</em>.</li> <li>You want to switch from an adjustable-rate mortgage (ARM) to <em>a fixed-rate mortgage</em>. While ARMs often have lower interest rates initially, you can experience a hike in rates over time. That’s why people sometimes decide to move to a fixed-rate mortgage, as it can result in lower interest rates and more stability.</li> <li>You have <em>equity in your home</em> that can be used for other purposes such as consolidating debt or funding renovations.</li> </ul> <p>No matter what your motivation is for refinancing your home, it's always important to consider the fees associated with the process, as well as any long-term implications.</p> <h2>What Happens to the Escrow when You Refinance?</h2> <p>When you refinance your home, a new escrow account is established with your new lender. This means that the old one will be closed, and the funds will be used towards paying off your old loan.</p> <p>However, if there is a positive balance in the old account, you will <strong>get an</strong> <a href="https://lightspeedescrow.com/blog-post/escrow-refund">escrow refund</a> after the new lender has paid off your old loan. Unfortunately, escrow funds cannot be moved to new loans, even if they are with the same lender. You will get a refund for all property tax and insurance payments you have made to that account since the last payment, typically within 45 days. The amount will then be used towards your new loan or credited to you at closing.</p> <p>In some cases, the refund of escrow after refinance may be larger than the amount needed to pay off the previous loan. This is because your new lender may be able to get a better deal on insurance and taxes for you, resulting in a lower escrow payment.</p> <p>It is typically impossible to apply held escrow funds from a previous loan to your new escrow account on the refinanced mortgage because the money will be sent to you later. So, you need to have extra money available at closing to fund your new escrow account. The lender might also request that you pay a sizable amount of taxes into escrow in advance, depending on the time of year you are refinancing. If you're refinancing later in the year, this is something to keep in mind.</p> <h3>How Is Escrow Calculated on Refinance?</h3> <p>When you refinance your home, your escrow payments will likely change as well. This is because the amount of money that goes towards insurance and taxes can vary from one loan to another.</p> <p><em>Your new lender will use your annual property taxes and insurance premiums to</em> <a href="https://lightspeedescrow.com/blog-post/estimated-escrow"><em>estimate escrow</em></a>. This information is then used to calculate how much you need to pay each month for your escrow account. Depending on the new terms of your loan, this amount may be higher or lower than before.</p> <p>For instance, if your annual property tax bill is $2,400 and your insurance premiums are $1,800, your lender would divide these amounts by 12 to determine how much needs to be paid each month. That means you would have to pay $200 for taxes and $150 for insurance each month</p> <h3>Does Escrow Go up when You Refinance?</h3> <p><strong>It is possible for your escrow payments to increase when you refinance</strong>, especially if the terms of your new loan require a larger down payment. This means that more money will be needed in the escrow account to cover the insurance and taxes associated with the loan. However, it is also possible that your escrow payments will go down. If your loan has lower interest rates or if you have a shorter repayment period, then the amount of money needed in escrow could decrease.</p> <h2>Work with Reliable Escrow Holders</h2> <p><a href="https://lightspeedescrow.com/refinancing">Refinancing your mortgage</a> can be a great way to access better terms and save money. However, it's important to understand how escrow works when refinancing so that you are aware of any changes in your payments. Knowing the details of the process can help you make an informed decision and ensure that you get the best terms possible.</p> <p>Understanding and taking care of escrow can be very stressful for both first-time buyers and those with multiple properties. If you’re having trouble differentiating between the different <a href="https://lightspeedescrow.com/blog-post/different-types-of-escrow">types of escrow</a>, learning the rules, and understanding how it works, you have nothing to worry about. <strong>Lightspeed Escrow is at your service</strong>!</p> <p>With our expedient services, you can have peace of mind knowing that experienced escrow professionals are handling every step of this complex process. We aim to provide you with a <em>smooth, quick, and stress-free escrow experience</em>. So, no matter what type of real estate transaction you need help with, you can <a href="https://lightspeedescrow.com/contact-us">contact us</a> and rely on our experts to take care of everything.</p>
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      • id18
      • slugwhat-is-firpta
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      • autor_nameLightspeed Escrow
      • titleBuying a Property from a Foreigner: What Is FIRPTA?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/what-is-firpta" }, "headline": "Buying a Property from a Foreigner: What Is FIRPTA?", "description": "Knowing about FIRPTA comes in handy when buying a property from a foreigner or when a non-US citizen wants to buy, sell, or invest in the US real estate market.", "image": "https://lightspeedescrow.com/files/blog/84d416aa-87be-471c-bcc2-2a7285e64e52_individual-income-tax.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-08-24", "dateModified": "2022-08-24" } </script> <p>When scrolling through listings and preparing yourself for the inevitable stress that comes with property purchase, you might stumble upon a property that will give you more headaches than you can imagine. But, If you get familiar with something called FIRPTA, the sale process might be a standard walk in the park.</p> <p>Buying a property from a foreigner is a bit more complicated because of the federal law that obligates you, as the buyer, to withhold a certain amount of the selling price and send it to the IRS. In this article, we will talk all about FIRPTA procedures, forms, and circumventions.</p> <h2>Foreign Investment Real Property Tax Act</h2> <p>FIRPTA stands for Foreign Investment Real Property Tax Act. This act was initially enacted in 1980 to encourage foreigners to invest in the US and enable the influx of foreign money into the country.</p> <p>Anyone can buy a property in the US, as long as they have enough money and they want to spend it in the States - no regulations exist to discourage such actions. However, FIRPTA’s quest was to eliminate the part when the foreigners sold the property, collected the gains, and took them to their native country.</p> <p>So, knowing about FIRPTA comes in handy when buying a property from a foreigner or if you are a non-US citizen looking to buy, sell, or invest in the US real estate market. Of course, you are not alone in that process. You need a reliable and knowledgeable <a href="https://lightspeedescrow.com/blog-post/the-role-of-an-escrow-officer-in-real-estate">escrow officer</a> and/or real estate agent to hold the money and help you along the way.</p> <h2>What Does FIRPTA Mean for the Buyer</h2> <p>A foreign citizen can buy a property in the US with no fuss or worries, and he is treated the same as any other buyer. So, for now, FIRPTA does not concern him. He does not need a green card, tax identification number, or residence status.</p> <p>However, the buyer who is purchasing the property from a foreign citizen has to be aware of the responsibilities that come with it. Before opening the escrow, they are required to become a withholding agent and withhold a certain amount of the agreed property value.</p> <p>After the sale is closed, <strong>the buyer has the responsibility to transfer that money to the IRS</strong>. The residual amount of the selling price they transfer to the foreign seller. In the next chapter, we’ll dive into the selling process and the obligations that the seller has before the closing.</p> <p>Before that, it is important to note that the buyer holds responsibility for the withheld money. That means - a buyer is responsible for finding out if the seller is a foreigner or not. If he doesn’t have a social security number - he is a foreigner, and one part of the selling price goes to the IRS.</p> <h3>Buyer’s Declaration</h3> <p>The buyer’s responsibility in cases like this can become problematic if the seller has no ITIN number. To avoid or reduce the FIRPTA withholding, the buyer can sign the Buyer’s Declaration. Depending on the selling price and if the property serves as a primary residence for the buyer (or his immediate family) 50% of the time during the first two years, the withholding can be circumvented or decreased.</p> <p>A buyer can <strong>avoid FIPTA</strong> withhold entirely if:</p> <p>The selling price is less than $300,000</p> <p>A buyer (or their family member) plans to live in the property for at least 50% of the time for two years after closing</p> <p>A buyer will <strong>withhold only 10%</strong> if:</p> <p>The selling price is between $300,000 and $1,000,000</p> <p>A buyer (or their family member) plans to live in the property for at least 50% of the time for two years after closing</p> <p><strong>Total withhold, or a maximum of 15%</strong>, is required if:</p> <p>The selling price is over $1,000,000</p> <p>OR if the buyer doesn't intend to use the property as their residence, regardless of the sale price</p> <p><strong>If the buyer does not sign the FIRPTA declaration - the withholding will be 15% no matter the primacy of the residency or the price.</strong></p> <h2>What Does FIRPTA Mean for the Seller</h2> <p>Although the seller technically owes the IRS a part of their proceeds from the sale, they are not responsible for the transfer. Even though this might seem inconvenient, this requirement ensures that the seller does not leave the country with the money before paying it to the US government.</p> <p>But, you might wonder, how does one prove that they are or aren’t a US citizen? Upon opening a <a href="https://lightspeedescrow.com/blog-post/different-types-of-escrow">real estate escrow account</a>, the escrow holder sends a FIRPTA affidavit for the seller to sign and state that they are an American citizen. If the seller isn’t a US citizen, they send the document back blank - stating that they are a “non-resident alien.”</p> <p>Settlement agents (usually escrow holders) or withholding agents are not responsible for checking the accuracy of the document and will not be liable in case the seller has committed perjury. Their responsibility is activated only when the seller admits their foreign status.</p> <h3>Do You Need an ITIN Number to Buy a Property in the US?</h3> <p>One important thing to remember if you are looking into buying a property for cash as a foreigner is that you don’t need an ITIN number for now. However, you will probably need it after you’ve become a property owner, and <strong>you will most definitely need it once you’re trying to sell it.</strong></p> <p>An ITIN stands for <em>Individual Tax Identification Number</em>, and it is the way by which an IRS recognizes you. Without this number, you will be unable to pay taxes and get a return on your income.</p> <p>Without this number, you cannot sell your property as a foreigner, as you might violate FIRPTA. Only if the buyer signs the declaration that they will make the property their primary residence and if the purchasing price is $300,000 or less can you skip creating an ITIN number - as you can avoid FIRPTA withholding.</p> <h3>Can You Claim a Refund?</h3> <p>Twenty days after the closing date is the time frame during which the buyer needs to send what is due to the IRS, along with two filled-out forms with all essential information - the seller’s ITIN is one of them.</p> <p>The IRS then credits the seller’s account, and the seller has the right to a refund. He is eligible for a refund only if he:</p> <ol> <li>Declared the sale of the property on an income tax return;</li> <li>Included the copy of the forms the buyer sent to the IRS upon closing;</li> <li>Had no other major financial activities in the US market.</li> </ol> <h3>How Does FIRPTA Look at Foreigners Married to Natives?</h3> <p>If you are a foreigner wanting to sell a property in the US and are married to a US citizen - the law looks at you as two unrelated individuals. Your spouse will not be withheld, but your proceeds are going to be required by the IRS.</p> <h2>What Is Important When Buying/Selling Under FIRPTA?</h2> <p>It doesn’t matter if you are the buyer or the seller - the most important thing you can do when entering a sale under FIRPTA is to find a good escrow agent. That is when <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a> comes onto the stage. You need more than just informed agents; what you need is an expert.</p> <p>We are a team of experienced professionals with excellent knowledge of real estate law, who work towards eliminating inconveniences in the selling process. For any and all escrow needs or questions -<a href="https://lightspeedescrow.com/contact-us"> contact us today</a>, and we’ll assist you as soon as possible.</p>
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      • id17
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      • autor_nameUnival Logistics
      • titleWhat Is a Closing Disclosure and What Does It Contain?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https:/lightspeedescrow.com/blog-post/closing-disclosure" }, "headline": "What Is a Closing Disclosure and What Does It Contain?", "description": "Closing disclosure is an important document that captures all your financial obligations to your mortgage lender. Read more about disclosures in this article.", "image": "https://lightspeedescrow.com/files/blog/0b7aad86-d351-4c01-adb3-cd1d19a67482_midsection-of-hands-holding-document.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-08-23", "dateModified": "2022-08-23" } </script> <p>People often feel discouraged when talking to their lenders and do not understand a word. Some greedy lenders do it on purpose - confuse their clients so they can take as much money. However, with closing disclosures, there should be nothing left unclear and unresolved. Especially when you can compare it with your loan estimate.</p> <p>But let’s start from the beginning. In this article, we’ll cover the purpose of closing disclosures, what you can expect from each page, how long you have to analyze it, and more. You'll learn all about the final processes of mortgage purchase.</p> <h2>What is a Closing Disclosure And Why Is It Important?</h2> <p>A closing disclosure is an important legal document that summarizes everything related to your home loan. Depending on where you live and what type of lender you use, your closing disclosure may include information about your mortgage payment, fees, taxes, insurance, <a href="https://lightspeedescrow.com/blog-post/how-to-open-escrow-account">escrow account</a>, and more.</p> <p>A closing disclosure gives borrowers three days to review the documents before signing off on the loan agreement. This allows borrowers to ask questions about the terms of the deal and ensure everything is accurate.</p> <p>Closing disclosures differ from credit reports because they don't report negative items like late payments or bankruptcies. Instead, they provide a list of corrections lenders might want to make to ensure the borrower understands what he or she is getting into.</p> <p>The Federal Trade Commission recommends that lenders provide a one-page summary of the key points of the loan agreement, including the APR, total amount financed, monthly payment, term length, interest rate, fees and costs, and whether there are pre-payment penalties.</p> <h2>Closing Disclosure Usually Has 5 Pages</h2> <p>Your closing disclosures include all the important information you need to know before closing on your home purchase. Everything you need to know about closing costs, property taxes, and mortgage rates is written in five pages.</p> <p>Lenders sometimes charge extra for certain types of loans. If you take out a 30-year fixed-rate mortgage, you could end up paying a premium for the longer duration. Similarly, if you finance part of your down payment with a gift, you'll likely be charged a fee to cover the tax implications.</p> <p>The good news is that most lenders offer some sort of discount for paying off closing costs early. But there are exceptions. For example, if you're buying a house in California, you won't qualify for a cash-back incentive if you close within 60 days of signing the contract. And while you can receive discounts for prepaying your principal, you must wait three months.</p> <p>In addition to standard closing costs, you'll also face additional charges if you choose to buy a home with no money down. These costs include points, origination fees, credit reports, and appraisals. You may also have to pay a seller contribution, which is a percentage of the sales price that goes toward helping fund local schools.</p> <h3>First Page</h3> <p>The first page of the closing disclosure presents you with general information about the loan and the key part-takers. There you have the information about the buyer, seller, and lender, the purpose of the loan, loan type, terms, and projected payments.</p> <p>The <em>loan terms section</em> shows you how much you have borrowed, how much is the monthly principal, and how much are going to be your monthly payments with an added rate. There, you’ll learn more about balloon payments and prepayment penalties.</p> <p>The smart thing to do it to have your loan estimate next to you and compare these two documents. A loan estimate is a loan prediction you get when you get preapproved. Estimate and closing disclosure do not have to be exactly the same, but you should have insights about potential changes, as well as the reasons behind them.</p> <h3>Second Page</h3> <p>Closing disclosure has a section on its second page that presents you with particular costs that go along with mortgage and property purchase - origination charges, projected taxes, title service, home inspection fees, commissions for real estate agents, and so on.</p> <p>Be patient when combing through errors in this part of the disclosure, as there will be many different numbers that might seem small, but can stack up over time.</p> <h3>Third Page</h3> <p>The third page of the home page is where you'll find some of the most important information about closing costs. There are many items that buyers want to know about as they approach closing.</p> <p>The third page will contain the summary of all closing transactions - how much you are due to the seller, how much is paid by the lender on your behalf, and the seller’s closing costs and taxes. It will be disclosed how much money the seller makes from the transaction.</p> <h3>Fourth Page</h3> <p>On the fourth page, you will find your <a href="https://lightspeedescrow.com/blog-post/escrow-fees">projected escrow fees</a> - annual property taxes, insurance premiums, and other costs that fall under escrow payments. Additionally, the fourth page is the one that answers hypothetical questions about your loan and your property. For example, there you will find answers to questions such as:</p> <ul> <li>What if I want to transfer a property title to another person?</li> <li>Can my lender ask for balloon payments?</li> <li>What if I don’t pay my monthly mortgage payment in time?</li> <li>What if I want to sell my property?</li> </ul> <p>All these things you need to know beforehand, so you don’t end up in an unfavorable situation that can cost you and the lender a lot of recourses.</p> <h3>Fifth Page</h3> <p>There you’ll find contact information of the parties involved, as well as additional loan calculations. Here, you can find a detailed explanation of foreclosure - in the event of several missed payments, your lender has the right to start a foreclosure process. You will find out after how many months the process will start.</p> <h2>Closing Disclosure Three-Day Rule</h2> <p>The lender needs to provide you with a copy of the closing disclosure statement at least three business days before the scheduled closing date. You'll receive it via email, fax, mail, or hand delivery.</p> <p>If you don't receive the closing disclosure statement within three business days, contact your loan servicer immediately. You're entitled to a written explanation of why you haven't received the document. Your loan servicer will send you a written response explaining what happened.</p> <p>Then, you have 10 calendar days to request a hearing. If you find errors or omissions in the closing disclosure statement, notify your loan servicer. They'll work to correct the problem.</p> <h2>Your Loan Cannot Be Denied After You Get a Closing Disclosure</h2> <p><strong>Only in case you’ve drastically changed your life in a span of a few days</strong> - lost a job, lost a lot of money, or it is proven that you have tampered with information you’ve provided - <strong>can the lender deny your loan so late in the process</strong>. In that case, the seller has the right to keep your <a href="https://lightspeedescrow.com/blog-post/earnest-money">earnest money</a>, and you even might have to pay some penalties.</p> <h2>Sellers at Closing</h2> <p>Sellers receive a closing disclosure at the same time as the buyer and have the same three-day period to respond with any complaints. At closing, sellers pay closing costs and other real estate fees.</p> <p>Oftentimes, it is the escrow holder that slows down the closing process. Precisely why a group of real estate experts and professionals founded <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a> - a company for all your escrow needs.</p> <p>We are trustworthy, efficient, and we understand how important it is for each party that the process runs smoothly. <a href="https://lightspeedescrow.com/contact-us">Contact us today</a> for more information about escrows.</p>
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      • short_descriptionClosing disclosure is an important document that captures all your financial obligations to your mortgage lender. Read more about disclosures in this article.
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      • titleEarnest Money Definition: What It Is & How It Works
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/earnest-money" }, "headline": "Earnest Money Definition: What It Is & How It Works", "description": "Tune in as we break down the earnest money definition and explain how the “good faith deposit” safeguards both parties during a property purchase.", "image": "https://lightspeedescrow.com/files/blog/9146a997-8044-4dd7-99bd-5cbec22fcf90_closeup-image-of-hands-holding-house-model-and-coins.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-08-15", "dateModified": "2022-08-15" } </script> <p>In today’s crowded real estate market, ensuring your offer on a home will stand out is crucial to securing the deal. There are several ways to let a seller know you’re serious about buying a home, and putting down an earnest money deposit is one of them.</p> <p>Since the complex real estate universe and terminology alone can make anyone’s head spin, in this article, we will break down what earnest money is, how it works and how to use the earnest money deposit to your advantage when buying and even selling a house.</p> <h2>Earnest Money Definition: What Is Earnest Money, Exactly?</h2> <p>Earnest money is a deposit made to a seller to show that the buyer is serious about purchasing a property, demonstrating the intent to buy a home. Earnest money also gives the buyer more time to secure financing and funding, conduct a title search, and have the property valued and inspected before closing. <strong>Thus, in many ways, earnest money definition can be considered a good faith deposit, a down payment on a home, or an escrow deposit</strong>.</p> <h3>Why Is Making An Earnest Money Deposit Important?</h3> <p>Although earnest money is not required to be part of a home offer by law, it’s a standard practice in most real estate transactions in the US. <strong>In most cases, sellers will ask for a good faith deposit before accepting a purchase contract as it safeguards the interests of both the seller and the buyer and acts as “added” insurance for both parties</strong>.</p> <p>Earnest money acts as “goodwill money” to show the seller that the potential buyer is serious about purchasing the home, which can be reassuring in the case of taking the house off the market while awaiting the appraisal and inspection results. It decreases the likelihood of a buyer placing multiple offers and protects the seller in case the buyer backs out of the agreement.</p> <p>On the other hand, the buyer can have peace of mind knowing that if the deal fell through due to failed contingencies listed in the contract, they would get their earnest deposit back. When buying properties with high demand, a substantial earnest money deposit can also drive the seller to select your offer over others, help you get more favorable contract terms, and lower the amount you need at closing since it's applied directly to your down payment or closing costs.</p> <h3>How Much Earnest Money Does a Homebuyer Need to Pay?</h3> <p><strong>The amount of earnest money is negotiable and mainly varies depending on the local real estate market but typically falls somewhere between 1% and 2% of the purchase price</strong>. A lower earnest money deposit may be suitable for a fixer-upper in a slow market, while in competitive, hot markets with multiple buyers, sellers are more likely to expect higher earnest money amounts that might range between 5% and 10% of the sales price.</p> <h2>How the “Good Faith Deposit” Works</h2> <p>After the seller accepts an offer, both the seller and buyer sign a real estate contract that defines the conditions of refunding the earnest money. The buyer delivers the earnest money deposit amount when entering into the purchase agreement, and the seller takes the home off the market until the sale successfully closes.</p> <p>Earnest money is usually held on an <a href="https://lightspeedescrow.com/blog-post/how-to-open-escrow-account">escrow account</a> or a third-party trust like a legal firm, real estate broker, or title company until the sale is wrapped up.</p> <h3>What Happens to Earnest Money at Closing?</h3> <p>The sale is only finalized when all the criteria covered by the contingencies listed in the purchase agreement are met. They typically include (but aren’t limited to) inspection, appraisal, and mortgage approval, among other items.</p> <p>The earnest money deposit funds remain in the trust or escrow account until closing when they get applied to the buyer's down payment or closing costs or forfeited to the seller in case the buyer fails to follow through on their end of the bargain.</p> <h3>Who Keeps Earnest Money?</h3> <p>Depending on how the deal goes through, one of the following scenarios can happen:</p> <ul> <li>If the deal goes smoothly and the buyer proceeds with the home purchase, the earnest money is put towards the buyer's down payment and closing costs.</li> <li>If the seller terminates the deal for any reason not listed in the contingencies or the buyer backs out because of contingencies included in the contract, the earnest money gets returned to the buyer.</li> <li>If the buyer decides not to purchase the home for a reason not covered by the contract, the buyer forfeits the earnest money, which then goes to the seller.</li> </ul> <h3><a href="https://lightspeedescrow.com/blog-post/is-earnest-money-refundable">Is Earnest Money Refundable?</a></h3> <p>One of the most common questions about this good faith deposit is: “Can I get my earnest money back?” <strong>Earnest money is refundable under certain conditions, depending on the contingencies in the contract that allow the buyer to recoup their deposit</strong>.</p> <p>The buyer always gets an earnest money refund if something goes wrong, such as an appraisal turning out to be lower than the sale price or a significant flaw with the house has been discovered during the inspection. If the seller terminates the deal without a valid reason or over contingencies not listed in the contract, the buyer gets their earnest money deposit back.</p> <p>However, the earnest money isn't always refundable. The seller gets to keep the earnest money if the buyer has a change of heart and decides not to go through with the home purchase for contingencies not listed in the contract or fails to meet any of them.</p> <h2>Protect Your Earnest Money with the right Escrow Services</h2> <p>The real estate market isn't immune to fraud and buying a home is a big purchase you shouldn’t bargain with. To prevent forfeiture and ensure the earnest money deposit is handled adequately, you need a reputable escrow company like <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a> in your corner to safely hold the earnest money until closing, protect both parties in the transaction and ensure they abide by the sales contract.</p>
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      • short_descriptionTune in as we break down the earnest money definition and explain how the “good faith deposit” safeguards both parties during a property purchase.
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      • titleComprehensive Guide Through an Escrow Analysis Statement
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/guide-through-an-escrow-analysis" }, "headline": "Comprehensive Guide Through an Escrow Analysis Statement", "description": "An escrow account is a valuable tool for managing finances, and an escrow analysis reviews those finances. Read more about it and an escrow statement in this article.", "image": "https://lightspeedescrow.com/files/blog/01340818-81b4-4ef8-859d-0cb675333788_property-icons-on-wooden-cubes.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/img/logo.png" } }, "datePublished": "2022-08-08", "dateModified": "2022-08-08" } </script> <p>Any homeowner would tell you that an escrow account can help you manage your finances more proficiently. You don’t have to think about lump sums for taxes and insurance premiums, and their dues. Each month you pay one installment of a large annual or semi-annual payment, and you are done. An escrow analysis is an essential part of managing those finances.</p> <p>An escrow analysis is essentially a periodical review of your escrow account. That way, your escrow holder knows if there will be enough money in your bank account for the next payment. The escrow analysis statement provides information about the ending balance of your escrow account. It lists the total amount remaining after covering your current obligations.</p> <p>In this article, we’ll go from the beginning and explain the purpose of escrow accounts and guide you through your average escrow statement, so you know what awaits you on the other side of homeownership.</p> <h2>The Purpose of an Escrow Account</h2> <p>You might think, ‘’Why can’t I pay these costs on my own?’’. Well, your lender might have requested this third-party account because it is the safest way to ensure that annual payments are paid in full and on time. This is their way of making sure you will not spend the money for <a href="https://lightspeedescrow.com/blog-post/when-are-property-taxes-due-in-california">property taxes</a> on something else that might be more urgent at the moment.</p> <p>The lender owns a legal title to your property and is responsible for every lien on it until the loan is paid off. That is why your homeowner costs and their unfulfillment present a liability to a lender. Additionally, escrow accounts help you manage your home budget and protect you from lump sums during the holidays when you probably have other expenses.</p> <p>So, when you pay your monthly mortgage payment, together with a mortgage premium installment and an added rate, you will be paying a certain escrow amount. That amount varies from homeowner to homeowner and depends on the state or county, the size of the house, and even the neighborhood.</p> <p>If you use an escrow account, you will receive an escrow disclosure statement every year. This document is actually a byproduct of an escrow analysis.</p> <h2>What is an Escrow Analysis?</h2> <p>An escrow account is a type of savings account that holds your money, and you cannot make withdrawals from that account. It protects you from unexpected costs. Any amount of money you put on that account you cannot simply take back.</p> <p>However, an escrow analysis serves as a tool to check how much money is there and how much money is supposed to be there. If the two don’t coincide, there will need to be a rebalancing of your account.</p> <p>The beginning balance is the amount you need in your escrow account in order to ensure there are enough funds to pay your real estate tax and insurance premiums for the upcoming year. A projection summary shows the amount you should expect to spend each month throughout the next twelve months.</p> <h2>Escrow Analysis: Rebalance</h2> <p>Rebalance can show two things. Either you have too much money in your bank account or too little. An escrow analysis is usually done in the first few months of the year after all expenses for the past year have been paid. If during that time you have a residual, your escrow holder will send you a check – a refund check.</p> <p>If the escrow analysis shows that you owe money, it means that your property tax and homeowner's insurance might be higher than before. You will have two options presented:</p> <ul> <li>Your future escrow payments adjust to the new expenses, and you pay a lump sum owed from the previous year.</li> <li>Your future escrow payments adjust to the new expenses plus the sum you owe for the previous year.</li> </ul> <h3>Escrow Refunds</h3> <p>For a homeowner, an <a href="https://lightspeedescrow.com/blog-post/escrow-refund">escrow refund</a> is something like a breeze of fresh air. Most envelopes that come their way are either bills or statements. However, sometimes, an escrow analysis shows that you have an unneeded surplus and your mortgage servicer sends you your money back.</p> <p>This check will always be more than $50 because that is the maximum amount of excess money that can be considered a surplus. Homeowners who paid off their mortgage before the last disbursement can expect their full yearly insurance premium and tax installments to arrive in the mail.</p> <h3>Escrow Shortages</h3> <p>Most homeowners don’t know what an escrow shortage is until it happens to them. But it’s one of those things that seems like it shouldn’t exist — and yet it does. And it’s happening to many people across the nation.</p> <p>The average homeowner spends $1,500 per year on escrow fees. Some spend even more. A recent study found that the median amount spent annually on <a href="https://lightspeedescrow.com/blog-post/escrow-fees">escrow fees</a> was $3,800. For borrowers who bought homes during the housing bubble, the average escrow fee hit $6,400.</p> <p>Why do escrows run dry? Sometimes it’s because the homeowner hasn’t paid enough taxes or insurance premiums. Other times, it is because the property has undergone some major construction that adds to the value.</p> <p>But it isn’t always easy to determine whether you have an escrow shortage. The truth is that most escrow problems aren’t obvious. They’re hidden inside paperwork that you never see. And that’s where we come in. We’ve put together this guide to help you figure out whether you have an issue with your escrow. Once you know, you can take action to fix it.</p> <h2>How to read your escrow analysis statement</h2> <p>After your escrow holder has ended the escrow analysis, they will create a statement - a visual review of all yearly transactions to and from your escrow account. You’ll then receive the statement, and if there is a need for a rebalance, you’ll receive it along with the refund check or a request to pay what you owe.</p> <p>It is essential to know how to read your escrow account statement. There will be a lot of numbers, but don’t let them confuse you. There will be a column that presents all your monthly escrow payments. Parallel with that column will be another one that presents you with each disbursement. Those are not done monthly, but annually or semi-annually.</p> <p>The third column is called projected escrow balance, and there it shows the next 12 months in escrow payments. Those projections always include a few hundred dollars more than what you’re actually due, in case of some unexpected raised costs.</p> <p>There will be an account history where you can compare last year’s projected payments with the actual costs of the account. This will help you understand next year's installments much better. If there is a surplus or a shortage, it will be explained in more detail in a separate section.</p> <h2>Working with an Experienced Escrow Company Can Help</h2> <p>When you are working with a professional that cares about you, there can’t be unanswered questions. There are a lot of escrow companies that keep their clients in the dark, but <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a> isn’t one of them.</p> <p>Moreover, we are a team of real estate professionals who know that escrows can sometimes be confusing. We are more than open to answer any and all questions that you may have about escrows, escrow analysis, and more.</p> <p>We are reliable and fast in all real estate transactions. <a href="https://lightspeedescrow.com/contact-us">Contact us</a> for all your escrow needs.</p>
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      • titleWhat Is a Grant Deed and How Does It Work?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/grant-deed" }, "headline": "What Is a Grant Deed and How Does It Work?", "description": "A grant deed offers unique benefits and protections to real property buyers. Learn more about this type of deed to decide whether it’s the right option for you.", "image": "https://lightspeedescrow.com/files/blog/77bcb7b8-4780-4209-a64c-b10fdb96d4c1_the-home-broker-recommends-the-client-to-sign-the-document.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/img/logo.png" } }, "datePublished": "2022-08-02", "dateModified": "2022-08-02" } </script> <p>If you’re about to engage in a real estate transaction, you need to gain a basic knowledge of deeds. And if you’re transferring or acquiring title to real property, you need to understand the different types of deeds and how you can benefit from them. This includes a <strong>grant deed</strong>, which is commonly used when the property is being obtained through a tax or foreclosure sale.</p> <p>Grant deeds, also known as “California grant deeds” because they are typically used in this state, are legal documents that offer unique protections to buyers. It’s an insurance policy the property seller provides to the buyer to ensure the buyer has no ethical or financial liability for future challenges to the property’s ownership.</p> <h2>What Is a Deed?</h2> <p><strong>A deed refers to a legal document that transfers title to real property from one party to the other</strong>. The party can be a person, a business entity, an estate, or a trust. The party transferring title is called the transferor or the grantor, and the party receiving title is called the transferee or the grantee.</p> <p>There are two primary types of deeds:</p> <ul> <li><strong>Quitclaim deeds:</strong> With quitclaim deeds, the grantee has no guarantee that the grantor has an interest in the property. If the grantor doesn’t have title to the property or there are issues with the title, the grantee has no legal recourse against the transferor.</li> <li><strong>Warranty deeds:</strong> With this type of deeds, including a grant deed, the grantor provides the grantee with one or more legally enforceable warranties or assurances regarding the title to the property.</li> </ul> <p>Warranty deeds may include exceptions for specific limitations on the property, such as a mortgage, property taxes owed, easements, and subdivision deed restrictions. That means that if any such exceptions are stated in the deed, they won’t be subject to warranties.</p> <p>Note that there are two types of warranty deeds:</p> <ol> <li><strong>General warranty deeds:</strong> General warranty deeds guarantee that there are no undisclosed title issues with the property. This also relates to the time before the grantor obtained the property. Moreover, it required the transferor to pay any legal expenses that may be incurred if a title issue emerges. Essentially, the grantor promises that there are no undisclosed title problems and that they will pay to defend the title in court. That said, a general warranty deed offers the transferee all the protection they can get.</li> <li><strong>Grant deeds: </strong>This type of deed is also known as a limited warranty deed or a special warranty deed, and it gives the grantee some, but not all, of the assurances of a general warranty deed. The typical grant deed makes two warranties. The first warranty is that the transferor hasn’t transferred the property to anyone else, and the second one is that there are no title issues that emerged during the time the grantor has held the title. However, a grant deed doesn’t give warranties as to any claims that may have occurred before the transferor obtained title and doesn’t promise to pay legal costs of defending any title claims.</li> </ol> <h2>What Are the Uses of Deeds?</h2> <p>The type of deed used depends on the nature of the property transfer and the relationship between the grantor and grantee.</p> <p>Quitclaim deeds make no guarantee to the buyer that there are no liens on the property. That means when a buyer receives this type of deed on a property, he takes a significant risk compared to other types of deeds. That said, quitclaim deeds are typically used in transfers between family members, into or out of the transferor's trust or business, or to correct a mistake in a warranty deed.</p> <p>General warranty deeds are considered the best property deeds because this type of deed provides the most protection. That’s why these deeds are often used when the grantor and grantee don’t know each other and money is changing hands. Note that a general warranty deed is almost always necessary when the buyer is getting a mortgage to finance the purchase.</p> <p><strong>Grant deeds are typically used when the grantee is obtaining title in a tax or foreclosure sale</strong>. It can be viewed as a middle ground, providing the grantee a level of protection somewhere between a general warranty deed and a quitclaim deed.</p> <h2>How Does a Grant Deed Work?</h2> <p>The purpose of a deed is to offer <strong>legal protection to buyers of real property</strong>. Grant deeds are often used when a grantee is obtaining real property in a foreclosure or tax sale. That said, they may also be held in escrow during a real estate transaction.</p> <p>With grant deeds, grantees benefit from buying property below market value, and grantors risk less by making fewer guarantees. That’s why, for buyers, they are considered more favorable than quitclaim deeds but less advantageous than general warranty deeds.</p> <p>A grant deed includes:</p> <ul> <li>Names of grantor and grantee</li> <li>Date of sale</li> <li>Property description</li> <li>Signature of grantor</li> <li>Notary public acknowledgment</li> <li>Warranty statements</li> </ul> <h2>Does a Grant Deed Need to Be Notarized?</h2> <p>A grant deed is a legal document that governs what protection a buyer gets when a seller transfers ownership of the real estate, and it <strong>only needs to be notarized following state law</strong>. So, check your state legislature’s website or talk to a real estate lawyer in your area to discover whether a grant deed needs to be notarized in your state or not.</p> <p>Getting a grant deed notarized is a vital step to making this document legally binding because a notary public must be physically present while both parties sign the grant deed to display their seal that certifies that the signatures are legitimate. You can think of a notary as a witness with legal permission to bear witness to legal binging concerns.</p> <h2>How to Obtain a Grant Deed</h2> <p>Getting a grant deed isn’t as complicated as many might think. The first step is to <strong>find a property you want to buy</strong>. You can do this by checking your local newspaper’s classified ads, searching the web, or asking your friends, family, and acquaintances.</p> <p>Foreclosure or tax sales are some of the most common exchanges that involve grant deeds. These types of sales are favorable because you have the opportunity to save money on the purchase agreement as such sales often occur at auctions. So, it may be a good idea to check your classified ads search or reach out to your local government agency to find a property auction near you. Real estate agents may also help.</p> <p><strong>You can only request a grant deed in the negotiations phase of a sale</strong>. Note that while grant deeds provide some level of protection, they may not always be the best alternative for the transfer of ownership of the real estate. General warranty deeds protect the buyer more and are the best option if you’re looking to buy a property.</p> <p>However, in some cases, a general warranty deed isn’t on the table nor is needed. And if you want additional protection when getting a grant deed, consider performing a deed search to get more insight into the property you’re interested in before closing the deal.</p> <h2>Protect Yourself During a Real Estate Transaction</h2> <p>After reading this article, you have a good idea of what a grant deed is and what protections it offers to buyers.</p> <p>With the grant deed, you have a guarantee that the grantor hasn’t transferred the property to someone else and that there are no title problems that emerged during the time the grantor has held the title. However, unlike general warranty deeds, grant deeds don’t give warranties as to any claims that may have happened before the grantor acquired the title and doesn’t promise to pay legal expenses of defending title claims.</p> <p>If you’re looking to buy real property and need the help of a professional, Lightspeed Escrow can help you get a grant deed and facilitate it. Contact us for any additional information you might need, and we’ll be glad to help.</p>
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      • short_description A grant deed offers unique benefits and protections to real property buyers. Learn more about this type of deed to decide whether it’s the right option for you.
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      • titlePurchasing Contract: What Does Contingent Mean in Real Estate?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/what-does-contingent-mean-in-real-estate" }, "headline": "Purchasing Contract: What Does Contingent Mean in Real Estate?", "description": "What does contingent mean in real estate? Pending Vs. Contingent? There are many complicated terms when it comes to real estate, and we are here to help you figure it out.", "image": "https://lightspeedescrow.com/files/blog/3d2bb4f6-9576-4285-a537-bec302cdd55e_manager-handshake-with-asian-couple.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-08-01", "dateModified": "2022-08-01" } </script> <p>A contingent property means that there are some conditions attached to the sale. This could mean anything from meeting specific requirements to passing a background check. If you buy a home without knowing exactly what you're getting yourself into, you could end up losing money.</p> <p>Contingency clauses are common in real estate deals. They protect both sides of the transaction. The buyer doesn't want to find out later that the seller didn't actually take care of something important. On the other side, the seller doesn’t want to get stuck in the sales process for too long, and lose value of their property.</p> <h2>Common Real Estate Statuses</h2> <p>When a seller puts the house on the market, that house can go through several statuses before actually getting sold. Listed houses go through stages of the selling process, but the one that’s the most interesting for the buyer is an active listing.</p> <p>Active listings are opened for offers, which means that the seller did not accept any offers and that it is open for showings. You can get all information about this property as a buyer and make an educative offer.</p> <p>Between active and sold, there are many different combinations of statuses. However, what many people wonder about it is what does contingent mean in real estate and how it differs from a pending listing.</p> <h3>Pending Listing</h3> <p>A property listed as pending has passed all clauses of the sales agreement and is approaching closing. However, there is still a chance that the sale will fall through.</p> <p>Take-backs are common during real estate transactions. If you find yourself in this position, it might mean that the buyer or the seller wants to renegotiate some terms before the transaction closes. That’s why the house is not sold until everything is settled and the title is transferred to the buyer.</p> <p>The term “backup offer” refers to an offer that is contingent upon another offer falling through. For example, let’s say that you want to sell your home for $300,000. You receive an offer of $320,000. However, the buyer backs out of the deal because he/she doesn’t like the neighborhood. So, you make a backup offer of $310,000.</p> <p>If the original offer fails to close, you still get what you wanted—the home sold for $310,000. Backups give sellers a way to negotiate down the asking price without losing the property entirely.</p> <p><strong>The main difference between pending and contingent is the fact that a pending listing is much closer to closing than a contingent.</strong> Let’s expand on that in the next chapter.</p> <h3>Contingent Listing</h3> <p>When a seller accepts the offer, they and the buyer sign a purchase contract or sales agreement. This document can allow both of them some wiggle room to negotiate other terms and back out of the sale if something undisclosed arises.</p> <p>The wiggle room is created by the contingencies that buyers and sellers put in the contract. Those clauses create conditions that each party must meet in order to proceed with the sale. Property is in the contingent status in the timeframe during which the signatories meet the contingencies.</p> <p>When a sale is on hold due to contingencies, you should consider listing your property as a contingent selling listing. This lets potential buyers know that you’re open to offers but with conditions.</p> <p>If you want to sell your home fast, you should remove contingencies before putting your house back on the market. Once you do this, you’ll likely receive multiple offers and close faster than if you hadn’t removed the contingencies.</p> <h2>What Does Contingent Mean In Real Estate?</h2> <p>A contingency clause is a term used in real estate transactions where both parties agree to certain terms and conditions before signing a contract. These clauses are often included in contracts because it helps protect both sides from unforeseen circumstances.</p> <p>There are many different types of contingencies that can be negotiated in real estate deals. Which item will be included in the contract is up to the sellers and buyers who are signing it.</p> <p>However, if you are a buyer borrowing money for a property, most likely that a mortgage contingency will be included in the contract. Similarly, lenders will probably require a title or inspection contingency just so that there are no unresolved issues and liabilities on their investment.</p> <h3>Home Inspection Clause</h3> <p>The home inspection contingency is an important clause in the sales contract because it <strong>allows the buyer to stop the sales process in case any major repairs arise</strong>. This contingency clause is one way to protect yourself during negotiations.</p> <p>If you are purchasing a home that needs work, it is important to ask about the seller’s inspection policy. This is especially true if there are problems with the property, such as termites, mold, water damage, etc.</p> <p>Buyers often waive inspection contingencies in competitive markets. In fact, most sellers will conduct an inspection before listing their properties. However, buyers don’t trust blindly the pre-inspection results as they could be tampered with by the seller.</p> <p>Here are some things to consider when a buyer insists on inspection contingency:</p> <ul> <li>How long will the inspection take?</li> <li>What happens if the buyer finds something wrong with the house?</li> <li>Will the seller pay for repairs?</li> </ul> <h3>Mortgage or Financing Contingency Clause</h3> <p>A mortgage contingency clause or a financing contingency allows the buyer to back out of the sale in case of not getting approved for a loan without losing their earnest money. <a href="https://lightspeedescrow.com/blog-post/earnest-money">Earnest money</a> is in an escrow account and is usually 10% to 20% of the purchasing price.</p> <p>Buyers usually get prequalified and/or preapproved for a loan. Prequalifying is not the same thing as preapproving. Preapproval means more to the buyer because, unlike prequalifying, it doesn’t just give them the ballpark estimate - it provides the concrete answer on how much can they borrow and under what terms.</p> <p>Still, neither preapproval nor prequalification guarantees that the buyer will get the loan. The financial situation of the buyer can change in the meantime, or the market can shift. For example, if the mortgage rate increases significantly in the meantime - a buyer will not be able to afford the same loan.</p> <p>Mortgage contingency gives them a way out of the sale, without losing earnest money. So they can search for the house in their new, adjusted budget.</p> <h3>Appraisal Contingency</h3> <p><strong>A home appraisal contingency allows the buyer to know what the true market value of the property</strong> is before signing the contract. This clause protects both parties from getting stuck with a high or low valuation during negotiations.</p> <p>The seller and buyer agree on a price based on the home’s current market value. If the home appraises for less than the agreed-upon amount, the lender will require a re-negotiation of the loan amount</p> <h3>Title Contingency Clause</h3> <p>A title contingency helps to protect buyers against any possible future claims. There could be issues with mortgage loans, liens, encumbrances, etc. These things need to be cleared up prior to closing. This protection gives you peace of mind knowing that if anything does come up, it won't affect the sale.</p> <p>Additionally, you can protect yourself by signing a warranty deed that obligates the seller to take responsibility for any potential issues regarding the property's title.</p> <h2>Can You Make an Offer on a Property in Contingency Status?</h2> <p>During your search through listings, you might find that many of them carry labels that are even more complicated than just “contingent” or “pending”. That is because there are a few contingents subcategories, depending on how open the seller is to new offers.</p> <p>The most common statuses are Contingent: Continues to Show and Contingent: No Show. <strong>The first one signifies that the seller is open to backup offers</strong> - maybe they suspect the buyer will not get approved, or other contingencies might take too long. <strong>If the contingent listing is a no-show - the seller is confident that the sales process has a clear path to the closing</strong>.</p> <p>You have the right to make an offer on any property you want, but you should consult with your agent before doing so. It is best not to spend your resources and time on making an offer that will never bring you a house.</p> <h2>How Long Can a Property Be Contingent?</h2> <p>A mortgage contingency period typically lasts anywhere from 30 to 60 days. During this time, you agree with your lender to the terms of the loan, including interest rates and payment amounts. This gives you time to secure financing and make sure everything goes smoothly once you close on the purchase.</p> <p>Inspections are another part of buying a house; however, it depends on what type of inspection you want. A pre-listing inspection is done prior to listing the property for sale. An open house inspection happens during the open house event itself. And a final walk-through inspection takes place after closing.</p> <p>Some sellers limit the period for meeting the finance contingency, and some buyers limit the period during which repairs must be completed. Each sales contract allows for parties to put their own clauses and conditions. <strong>However, properties are, on average, listed as contingent for 60 days</strong>.</p> <h2>What Happens to the Earnest Money?</h2> <p>Earnest money is the amount of money the buyer transfers to open an <a href="https://lightspeedescrow.com/blog-post/how-to-open-escrow-account">escrow account</a> when the sales contract is signed. The escrow holder is responsible for more than just holding the money until the closing. Rather, they are following closely the resolution of contingencies, dealing with repairs, and title issues - and ensuring that everything goes according to the sales agreement.</p> <p>You need a reliable escrow holder! We can help you with that. We are real estate experts who know how big of an inconvenience can an unreliable escrow holder be - so we decided to fix this. Contact <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a> for the best escrow service in California.</p>
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      • titleWhat Is Escrow Disbursement: Definition, Advantages, and Disadvantages
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/escrow-disbursement" }, "headline": "What Is Escrow Disbursement: Definition, Advantages, and Disadvantages", "description": "Having an escrow account means that you don’t have to make a large sum at the end of the year. An escrow officer does that for you with an escrow disbursement.", "image": "https://lightspeedescrow.com/files/blog/7d0b0874-9a7f-49fd-8b3a-f52f8cd4ed39_toy-house-and-money-on-the-graph.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/img/logo.png" } }, "datePublished": "2022-06-30", "dateModified": "2022-06-30" } </script> <p>An average homeowner has many expenses. From mortgage payments to living costs - it is sometimes hard to keep track of all things there are to be paid during the year. So it's no wonder you might panic when you get to an escrow disbursement. If you don't know what that is, you might think to yourself ''What now?''</p> <p>Even before becoming a homeowner, it is best to get familiar with some processes and reasons behind them, so as not to get taken by surprise along the way. Escrow can be a confusing term because there are two types of escrows in real estate, but once you understand the difference between them it will be easier to grasp the concept of escrow disbursement.</p> <h2>What is Escrow in Real Estate</h2> <p>The real estate industry uses tools and regulations to protect the people who enter the market, as well as those who provide the services. An escrow is just that - a bank account run by an impartial third party that holds the borrower's or buyer's money.</p> <p>An escrow can be the intermediary that holds <a href="https://lightspeedescrow.com/blog-post/earnest-money">earnest money</a> during the home sale, or a bank account that collects homeowner fees during the year, so you don't have to pay an annual lump sum. Both of them have a distinct role in real estate transactions.</p> <p>An escrow transaction during the sale helps to protect both sellers and buyers from breaking the sales contract. This escrow account closes at closing, after which you open a more long-term account for escrow funds. Most lenders will require you to open an escrow account.</p> <p>Escrow accounts that exist during the life of the loan are there to ensure you are paying your dues. In addition to paying monthly mortgage payments, plus interest - a sum of money will be transferred to your escrow account, to cover insurance and <a href="https://lightspeedescrow.com/blog-post/when-are-property-taxes-due-in-california">property taxes</a>.</p> <h3>PITI Payment</h3> <p>Real estate agents use abbreviations to explain common real estate transactions and processes. Therefore, they often use the acronym PITI payment to explain the whole sum of a monthly mortgage payment - Principal + Interest +Tax + Insurance.</p> <p><em>Principal</em> refers to the part of the loan you are actually paying off that month. <em>Interest </em>is pretty self-explanatory - depending on a mortgage rate you’ve unlocked, you are paying interest on a principal. This money goes directly to the bank account of your lender.</p> <p>The other part of most monthly payments is transferred to an escrow account. Funds in escrow are collected throughout the whole year and you cannot spend them. Rather, an <a href="https://lightspeedescrow.com/blog-post/the-role-of-an-escrow-officer-in-real-estate">escrow officer</a> collects your money and makes annual payments of such costs in your name.</p> <p>Both <em>property taxes</em> and <em>homeowner insurance</em> installments are usually due in December, so an escrow account spares you from making a sum payment during the holiday season.</p> <h2>Escrow Disbursement</h2> <p>Escrow disbursement is actually the act of dispensing the escrow money, in this case on property taxes and insurance policies. Each escrow officer has a contract that obliges them with the responsibility of making a money transfer at a certain time of the year.</p> <p>When a buyer makes regular monthly payments to an escrow fund, it is entirely the escrow officer’s legal responsibility to make payments on time, otherwise, they can be facing a lawsuit.</p> <p>An escrow disbursement can refer to the buyer-to-seller transaction upon purchasing a house. When all the conditions from the sales contract are met, and both parties are ready to sign closing papers - that’s when an escrow disbursement of earnest money occurs.</p> <p>An escrow agent will then release the buyer’s money from the escrow account into the seller’s private bank account. Earnest money deposits are almost always regulated using the escrow account for added protection.</p> <p>Escrow disbursement for tax and insurance payments is something that a homeowner gets notified about so they can keep track of their obligations. However, they don’t need to set aside money and make a thousand-dollar payment during the busiest time of the year.</p> <h2>Escrow Disbursement Refund</h2> <p>If you are lucky, you might get an escrow disbursement refund check in the mail upon the next escrow account analysis. The most common way to get a refund is to pay off your loan entirely and sometimes even when you’re refinancing - if the tax or the insurance is lowered. It doesn’t have to be a huge check, but it certainly puts a smile on your face and unplanned money in your pocket.</p> <p>Depending on the location, property description, and how much you’ve paid upon closing, you could be seeing up to a few thousand dollars on the refund check. This could happen to you a couple of weeks after an escrow account analysis, or 20 days from when you paid off your mortgage.</p> <p>When you’re refinancing your mortgage you could be having an escrow disbursement refund only when you’re changing lenders who are working with different escrow servicers.</p> <p>Moreover, if any kind of change happened just after an escrow disbursement came through, you might not be getting a large refund, as the money has already been used to pay expenses. The money you get from an <a href="https://lightspeedescrow.com/blog-post/escrow-refund">escrow refund</a> is yours and you can spend it however you want.</p> <h2>Who Manages Escrow Accounts?</h2> <p>Escrows upon purchases are usually run by a title company, but homeowners’ escrows are dealt with by a lender and a mortgage servicer. A mortgage servicer is getting your payments and passing them onto tax authorities, investors, and insurers.</p> <p>Most people work with their lenders’ mortgage servicing companies, but you can always choose your own escrow holder. You want them to be responsible and reliable. It’s not only about collecting and holding the money, it’s about precise estimations of expenses, as well as fair refunds if they’re due.</p> <p>The biggest downside of an escrow is that it creates higher monthly expenses for the homeowner, but it assures the funds for annual financial obligations. Many people would save up, but put their hand in that jar as soon as things start to heat up. The escrow holder is making it impossible to stip yourself out of that money.</p> <h2>How to Find a Reliable Escrow Servicer?</h2> <p>Finding a reliable escrow servicer is easy with <a href="https://lightspeedescrow.com/">Lightspeed Escrow</a>. If you are in search of a specialized escrow holder and you live in Southern California, contact us and our first available officer will contact you immediately. We are dealing with both real estate and homeowner escrow disbursement, so you can rely on us from the beginning.</p>
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      • titleIs California a Community Property State?
      • body<script type="application/ld+json"> { "@context": "https://schema.org", "@type": "BlogPosting", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://lightspeedescrow.com/blog-post/is-california-a-community-property-state" }, "headline": "Is California a Community Property State?", "description": "Community property states are states where community property law rules. Is California a community property state, and how does this law work? Discover here.", "image": "https://lightspeedescrow.com/files/blog/3189c4f8-fa8a-45f2-a9fe-d6b3fe650de8_street-with-palm-trees-in-california.jpg", "author": { "@type": "Organization", "name": "Lightspeed Escrow", "url": "https://lightspeedescrow.com/" }, "publisher": { "@type": "Organization", "name": "Lightspeed Escrow", "logo": { "@type": "ImageObject", "url": "https://lightspeedescrow.com/theme/Public/images/logo-dark.svg" } }, "datePublished": "2022-09-20", "dateModified": "2022-09-20" } </script> <p>Community property, also known as marital property, spousal assets, and marital assets, is vital when it comes to divorce, estate law, and taxes. It encompasses all assets you obtained during the marriage.</p> <p>Community property states are states where community property law rules. Here, couples must split equally all assets acquired during their marriage, including real estate.</p> <p>So, <strong>is California a community property state</strong>? Find out in this article.</p> <h2>What Is a Community Property State?</h2> <p>Divorce is one of the modern world’s most draining experiences. However, in the US, nine states have tried to facilitate this process by passing community property laws. In community property states, <strong>couples must divide equally all assets obtained during their marriage</strong>. The goal is to reduce the quarrels over who gets how much of what by having the law dictate the split.</p> <p>The nine states are:</p> <ul> <li>Arizona</li> <li>California</li> <li>Idaho</li> <li>Louisiana</li> <li>Nevada</li> <li>New Mexico</li> <li>Texas</li> <li>Washington</li> <li>Wisconsin</li> </ul> <p>While, in some states, divorce laws are leaning toward the community property concept, the nine states mentioned above are the only true community property states as of June 2021. Alaska, South Dakota, and Tennessee have an “opt-in” community property law that enables such a division of property if both individuals agree.</p> <h2>What Is Community Property?</h2> <p>Also known as marital property, community property is <strong>a US state-level distinction that identifies a married individual’s assets</strong>. And real or personal property and any income obtained by either spouse during a marriage are considered community property. Therefore, they belong to both partners, meaning both spouses own and owe everything equally, regardless of who earns or spends the income.</p> <h2>Understanding Community Property</h2> <p>In community property jurisdictions, each spouse owns a share of the marital assets, including real estate and other financial assets acquired during the marriage. In some jurisdictions, such as California, community property is split strictly in half, with each spouse getting 50% of any assets considered marital property.</p> <p>However, in other jurisdictions, such as Texas, a judge may decide to split assets in any denomination they deem fair to both spouses.</p> <p>Typically, inherited assets and gifts to one spouse aren’t considered marital property, whereas debts acquired during the marriage are usually considered community property.</p> <p>Existing to protect spousal rights, the concept of community property originated in Spanish law, a system of civil law derived from Roman civil law and the <u><a href="https://www.britannica.com/topic/Visigoth">Visigothic Code</a></u>. It acknowledges that both spouses contribute to marriage differently and considers them financially equal under the law.</p> <p>For instance, community property considers the contribution of a “breadwinning” spouse and a homemaking spouse as equals by <strong>granting both spouses a share of marital property</strong>. This is true even if the homemaking spouse may not have brought financial or other assets into the marriage.</p> <h2>So, Is California a Community Property State?</h2> <p><strong>California is a community property state</strong>. And according to the California Family Code section 760, community property is defined as all property, personal or real, wherever situated, obtained by a married individual during the marriage while domiciled in the state. Once officially divorced, community property is typically divided 50/50 between the ex-spouses.</p> <h3>Exceptions to Community Property in California</h3> <p>There are several exceptions to community property in California. Under specific circumstances, the law will regard property as separate property of just one spouse:</p> <ul> <li>The property was given to one spouse as a gift.</li> <li>One spouse received the property through someone’s will or a trust fund.</li> <li>One spouse received it as an inheritance.</li> <li>A spouse acquired it before marriage.</li> <li>The property was acquired by one spouse or just that spouse's money.</li> <li>It was obtained when the couple was living apart or separated. Typically, spouses are regarded by the law as living apart when one of them informs the other that they don’t want the marriage to continue. They also must physically reside in separate locations.</li> </ul> <h2>What Is Property Under California Law?</h2> <p>Under California law, property is <strong>anything you can sell or buy</strong>, including real estate, furniture, vehicles, clothing, and household goods. Also, it’s <strong>anything that holds value</strong>, even if you can’t sell or buy it, such as cash, bank accounts, stocks, pension plans, businesses, patents, life insurance with cash value, etc.</p> <p>When you divorce your spouse, you can come up with an agreement that gives you and your spouse a fair share of the property. However, the judge will still have to sign off on it, even if you agree. And if the settlement is unfair to one of you, the judge is free to tell you to come back with another plan. On the other hand, if you and your spouse don’t agree, you’ll have to ask the judge to rule or go to mediation.</p> <h2>What Is the Difference Between Community Property vs. the Common Law Stat</h2> <p>Most states rely on the concept of common law property to decide who owns property obtained during a marriage. Common law property is considered <strong>the property of the spouse who obtains it during the marriage</strong> unless it’s placed under the names of both spouses.</p> <p>So, how is property divided in a common law property state in case of a divorce? The guiding principle is equitable distribution. Here, the idea is that property ownership is unequal due to factors such as spouses’ education, employability, earrings level, financial needs, health, and age.</p> <p>Considering these factors should make the distribution fair, but not necessarily equal. For example, in some cases, judges may demand one spouse to use their separate property to make a settlement fair to both individuals.</p> <p>Divorcing spouses will often work out how they wish to split their assets and debts themselves or with the help of a neutral party. However, if they can’t agree, the court decides on the division of property based on the laws of the state.</p> <h2>What Is Separate Property?</h2> <p>Separate property is <strong>the property that one spouse owned before the marriage</strong>. It also covers inheritance and gifts given to one spouse and property bought or earned after the separation. This is the main reason why the date of separation is vital in many divorces and should be recorded and discussed with your lawyer as soon as possible.</p> <p>Moreover, any property purchased with separate property is separate property, despite being bought during the marriage. In addition, income or rent earned from separate property is also separate, meaning rent or money made from businesses or real estate owned before marriage will still be separate property unless mixed with community assets.</p> <h2>How Does Separate Property Become Marital Property?</h2> <p>The trickiest part of marital vs. separate assets is that most married couples behave as a single household. They spend money from the same bank accounts, share significant assets, and hold property in common. This leads to what the law considers “commingling”.</p> <p>Commingling happens when separate assets are used by both spouses or when married couples share separate assets, causing these assets to be reclassified as marital assets.</p> <h2>Protect Yourself During a Divorce</h2> <p>Each spouse should open separate bank and savings accounts once the split happens. However, an <a href="https://lightspeedescrow.com/blog-post/how-to-open-escrow-account">escrow account</a> may be needed to ensure adequate support for shared children or a disadvantaged spouse. An escrow account can also prevent unnecessary or excessive depletion of joint marital funds.</p> <p>If you need escrow services, work with a good agency, such as Lightspeed Escrow. We are a team of experts who know how the get the job done expediently and avoid common pitfalls. So, <a href="https://lightspeedescrow.com/contact-us">contact Lightspeed Escrow</a> for quick and accurate escrow services.</p>
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