First Time Homebuyer’s Real Estate Word for Today is Escrow

First Time Homebuyer Word of the Day is Escrow

In a recent episode of the Emmy award winning television show, Cash Cab, several people with stumped by the acronym, FSBO. This is a often term often used in the real estate world to describe a person selling their home by owner (For Sale By Owner). As a REALTOR® I was a bit surprised that such a simple term I use everyday would be unknown to so many. But then it got me thinking of all the times a glazed look came over a buyer’s eyes when I talked about escrow or earnest money. These can easily be confused with other real estate and mortgage terms like down payment or cash to close. It is totally understandable because most homebuyers do not buy houses everyday.

There are so many terms that could possibly confuse a First Time Homebuyer that I thought an online glossary of real estate terms might be helpful. So over the next few weeks I am going to have a series of posts for the first time homebuyer with explanations of the most often used (and sometimes confusing) real estate terms. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. Today’s Real Estate Term is:

Escrow This term can be confusing as it is used a few different ways. In some states, going into escrow is defined as the period of time after the purchase agreement is signed but prior to closing. In Minnesota we call that time period, pending, not escrow.

In Minnesota, the term escrow means funds held by a third party for a future payment. The most common time a first time buyer hear the term used is in regard to the required funds held in escrow by their mortgage company on a monthly basis to cover the taxes and property insurance for the home. This amount will be added to the monthly payment and the mortgage company will be then responsible for making the payments directly to the insurance company and the county for taxes. Putting funds into escrow is not required for all buyers. If a significant down payment is made at the time of purchase, a lender will not require funds to be placed in escrow for taxes and insurance. A buyer can then pay their insurance company and county directly.

There is another time when funds may be placed in escrow. There are some instances where essential repairs cannot be made prior to closing. In this instance, a mortgage company may allow funds to be place into the title company's escrow account on the date of closing and held there until the repairs are made. It is now rare that a mortgage company will allow this; usually only in the case of off season weather where it would be impossible to make the repair such as installation of a septic system or cement driveway in the winter. 




Copyright 2012 Teri Eckholm 

Twin Cities First Time Homebuyer Class—What You Really Need to Know to Buy YOUR First House

People doing something, anything, for the first time will often never start because they are afraid of taking that first step. Learning to ride a bike. Learning to swim. Learning to Drive. Learning a foreign language. Even setting up an extensive vacation can be a challenge. I had a REALTOR® friend ask me a few months ago how to start a real estate blog. I gave her the basic steps for a quick and easy set up but she wanted to go to a class and the library for books. At last check, she doesn’t have a blog…she was still in the “learning” phase.

Sometimes, first time homebuyers do not know where to start either. Most people’s only experience with buying a big ticket item doesn’t go beyond buying a car (and we all can remember how much “FUN” that was!) Buying a home is a different experience because when you purchase a house you can have a person in your corner working for you…much like that used car salesman was working for his manager in the back that he kept going to for approval on your offer. Only this time, you are not left alone in a cubicle with a stale donut and cold coffee waiting for a counteroffer.

First time homebuyers who want to learn more about the process generally start by scouring the internet for answers. There is a load of information out there…but is it GOOD information? How does it relate to buying a Minnesota home? Will the programs outlined on the website visited work if you want to buy a home in Washington County, Anoka County or is it only for a specific area or state?

Often I am asked by friends and relatives where potential home buyers can take a class to learn more about buying a home. Most people need a class that will fit their schedule and get them out searching for their dream home very quickly.

Well, I will let you in on a little secret. First time homebuyers do not need to sit in a class on someone else’s schedule with a bunch of potential homebuyers to learn to buy a home. There isn’t a class requirement for buying a house. But if you want to learn, call me for a 30 minute quick start consult on buying a Minnesota home!
If you are serious about buying a home and taking advantage of the extremely low interest rates that are available this fall, let me be your guide. As an experienced and professional REALTOR® with hundreds of extremely happy clients, I can educate you quickly on the process of buying your first home and at no cost to you!
Contact me HERE and request your**FREE** HOMEBUYER SUCCESS PACKAGE. As soon as I receive your information, I will call you to set up a time that works for you for no-obligation, low-pressure 30 Minute consultation. You will leave with my Homebuyer Success Packet in hand and have all your questions answered on the home buying process.
Copyright 2010 Teri Eckholm