New homebuyers often have a lot to learn about the many moving parts of a property transaction—it’s usually not just a matter of handing over the money and receiving a deed. Besides the loan officer, attorneys, and various processing specialists, the buyer and seller may also need to engage the services of an escrow—a neutral third party who makes sure that the transfer of funds and property are handled in a timely and fair manner.

In real estate, escrow is used for two purposes, both before and after closing. After a real estate purchase agreement is signed by the buyer and seller, an escrow officer will be charged with collecting the buyer’s deposit as well as any documentation and contracts related to the purchase. This escrow officer may be from a licensed escrow or title company, and may be chosen by either the buyer or seller, per prior agreement (this agreement will also include deciding who pays the escrow fees, which may be about 1-2% of the home’s purchase price). The deposit, and any additional monies deposited by the buyer into the escrow account, will be used towards the price of purchase or to pay any contractors doing work related to the property. The escrow officer may also manage a number of “checkpoints” that either the buyer or seller must meet in order for the transaction to continue, such as a property inspection or the resolution of any easements or liens. If the deal falls through, the buyer will receive a refund of all money deposited into the escrow account. When the transaction officially closes, the escrow officer will release the money to the seller, and the title to the buyer.

After closing, a mortgage lender will often require that the borrower deposit into a new escrow account that collects payments for mortgage insurance and property taxes. The monthly escrow payment is calculated by dividing the expected annual cost of tax disbursements and insurance premiums by 12; this payment may be re-determined each year depending on changes in tax policy or insurance adjustments.

Escrow is used in certain housing markets more frequently than others, and individual states have different guidelines for how escrow is to be handled. The costs of using an escrow account may or may not be outweighed by its advantages and security features—the parties involved in the transaction will tend to decide that amongst themselves.

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In our current economy, the debate of Buy Vs Rent has picked up steam recently. With reduced prices and historically low rates, buying real estate is very attractive. On the other hand, lending guideline changes as well as economic and employment restrictions have made a lot of people nervous about spending moeny. Buying a home is a very big decision for any consumer. There are many distinct advantages to owning instead of renting, but before you decide which is right for your lifestyle, you should weigh all of the pro’s and con’s side by side.

Advantages of Renting
• Very little responsibility for maintenance, possibly including utilities
• Easy mobility

Advantages of Owning
• Property will accrue equity over time
• Freedom to alter home and landscaping to one’s preferences
• No need to wait on landlord for maintenance concerns
• Tax benefits
• Costs less over time than renting

Disadvantages of Renting
• No tax benefits or accrual of equity
• No control over rent increases
• Possibility of eviction if landlord chooses to sell property

Disadvantages of Owning
• Responsible for maintenance and utilities
• Property taxes
• Lesser mobility

Of course, there are numerous other factors that will go into the decision to switch from a renter to a buyer (or vice versa), but the above list should give you a good starting point for consideration.

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Spring real estate market is in full swing. As buyers, sellers and home builders negotiate extra add-ons and amenities prior to signing a purchase agreement, many forget the basics of prepping a home before it goes on the market. Consider a few tips:

Buy new furniture. It will look great in your current setting, and even better in your new home.

Place ice cubes on top of carpet indentations. The ice helps lift the fibers back to life.

When repainting the walls, choose light, bright colors with neutral tones.

Store personal photos. Though your buyers would surely love to see the photo of your first skydiving experience, you can always recount the story at the closing.

Update child bedroom décor to match the theme of the entire home.

Set a date with your realtor to give you ideas on final touches. He/she will be your best test audience with a motivational deadline.

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