You've bought your dream house and filled out all the required paperwork, but now your dream is on hold. The escrow closing date is just days away and there isn't any way to complete everything required by your sales contract. While meeting the escrow closing date is ideal, it's usually possible to extend your closing date. If all parties agree to extend the escrow, you'll still have your dream house.
When you sign the sales agreement for your new house or condo, your contract lists a date for the end of the agreement. The sellers and the buyers agree to the terms, so everyone is on the same page. The date listed on the legal document, however, might not be the actual date your home closes. There are many reasons for possible delays. Some delays are within your control to avoid, and others result from failures by your sales team and fate steps to delay. Repairs for damage found during inspections, discovery of undisclosed loans or property boundaries problems can all mean delays.
The escrow agreement is the sales agreement you sign to purchase a house, car or large item. Your escrow officer follows directions from the buyer and seller and also meets federal and state laws. The escrow company, an independent third party to the sale, is paid to keep the transaction on track by following the demands made in the sales agreement, including the directions given in any amendments to the sales contract. If your contract allows a week for home inspections, the inspectors must be done before the deadline arrives. Your sales contract lists an escrow closing date and your escrow officer works to meet it.
Meeting your sales agreement deadline is important to you. Your loan paperwork sets a date for the bank to supply the money for your mortgage. Mortgage interest rates lock, meaning a freeze on a specific rate, only for a specific number of days. If you don't use your mortgage within that period, the bank needs to lock in another home closing date. This might mean paying higher interest rates for the new interest lock. Missing deadlines also means the possibility of paying extra rent or paying to store your furniture when the moving truck arrives and movers can't put your things inside your new house.
Your escrow officer can file an amendment to extend your closing date, but only if both buyer and seller agree to sign the amendment. The buyer, seller or real estate agent must draft the amendment, have everyone sign and return the amendment to escrow. The escrow office then incorporates the amendment as a legal addition to the sales contract. The escrow copy of the new amendment also needs fresh signatures. The party responsible for the delay -- meaning buyer or seller -- ends up footing the escrow bill for the amendment, although sometimes escrow waives fees. Contract amendments must list a new closing date for the sale.
- Realtor.com: What Is Escrow?
- FHA Home Loans: Possible Loan Closing Delays
- Federal Deposit Insurance Corporation: 6500 -- Consumer Protection
- U.S. Department of Housing and Urban Development: Buying Your Home -- Settlement Costs and Information
- Teckco LLC: Fast Fact -- Escrow Delays
- Nolo.com: Sales Agreement
- Instructional Technology Development Center at Long Beach City College: Escrow and Title Insurance
- Dearborn Real Estate Education: Loan Escrow Instructions
- Digital Vision./Digital Vision/Getty Images
- What Happens Between Home Loan Underwriting & Closing?
- What Renovations Bring the Most Equity?
- What Is a Title Loan on a Mobile Home?
- What Are the Benefits of FHA Loans for First Home Owners?
- Implications of Assuming a Mortgage
- How Will Buying a Car Affect My Home Loan in Process?
- Reasons to File Chapter 13
- Extending an Escrow Agreement
- What Is the Difference Between an Option ARM & a Conventional ARM?
- Does Pre-Qualifying With Several Lenders for a Home Loan Hurt My Credit?