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SS, Home Buyer in California

what is disadvantage of 60 days escrow VS 45 days escrow?

Asked by SS, California Thu Apr 7, 2011

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... besides the discussion about locking rates....

60-days escrow may turn off some sellers who want to close a deal sooner. If they're in a hurry to close escrow and move on, they may even prefer 30 days or less.

If you're competing with another buyer, a longer escrow period weakens your offer.

it also raises questions about your ability to close (lack of funds? borrowing from friends and relatives, and needing time to "season" the money in your account?)
0 votes Thank Flag Link Thu Apr 7, 2011
One other small consideration would be; if you are getting ready to put an offer in on something, a 30 day escrow would provide a much stronger offer from the Sellers stand perspective. Even a 45 day would be stronger then a 60 in most sellers eyes.

But as stated below, you must be able to have your ducks in a row and actually be prepared to close in the time period you choose.
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http://www.trulia.com/blog/leegoade/2011/02/the_1st_step_to_…
0 votes Thank Flag Link Thu Apr 7, 2011
A 60 day escrow isn't a disadvantage but usually having 30 days to lock in a rate is ample time and costs less than a 60 day term. A 45 to 60 day escrow is probably a good escrow length that will allow enough time in case there are surprises during inspections that require further investigation, delays in the appraisal process or personal events that often happen when you least expect it.
0 votes Thank Flag Link Thu Apr 7, 2011
SS,

As several professionals below have stated, a 60 day rate lock costs more than a 30 day rate lock in most cases. However, note that you do not have to lock your rate the day you go into escrow. In other words, you can have a 60 escrow, and then 30 days into it, you can choose to lock your rate with your lender. Of course, you run the risk that rates could go higher during that time frame, but by that logic they could also stay the same or go lower.

So, the point here is that rate locks and close of escrow do not need to share an equivalent time period.

Let me know if you have any questions.

Thank you,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes Thank Flag Link Thu Apr 7, 2011
@John, you might want to try a different FHA lender. Honestly, 30 days should be enough time unless the subject property is an REO. I realize my profile says "Spokane, WA" but half my clients are in CA. We haven't had any go longer than 30 and I'll bet they can be done quicker. I know there are cases where the escrow process will take longer than 30 but that should really be the exception, not the rule.

@SS - go 45 days. The only reason I can think of as an advantage to go 60 is if you could not vacate your premises until then. My experience has been that the longer an escrow is open the more chance it all falls apart due to lending guideline changes, interest rate changes, etc.
0 votes Thank Flag Link Thu Apr 7, 2011
John is correct: "With a cash purchase or if an especially credit worthy buyer has a large down payment the transaction processing period can be shorter." Yet, a business partner and I have recent experience (based on some deals in OH) where the seller (typically a bank) asked for longer times. We offered to close within 10 to 15 days, and they couldn't get their "stuff" together in that short of a period of time--even on REOs.

So keep all of that in mind. Be prepared to follow through on whatever you promised, and make sure that you do everything that you can so that you're not the hold up. That's the best one can do.
0 votes Thank Flag Link Thu Apr 7, 2011
In the past, 30 days was plenty of time to get everything done and close a purchase. Now I almost always write 45 days into my offers because I can’t count on the lenders getting their work done in a timely manner. FHA loans are especially problematic. Too often, we get unexpected requests or a demand for a second appraisal and time marches on. With a cash purchase or if an especially credit worthy buyer has a large down payment the transaction processing period can be shorter.
0 votes Thank Flag Link Thu Apr 7, 2011
Both have their pros and cons. It really depends upon what the buyer/seller intend to do. A shorter duration can be beneficial for both, or a longer duration can be beneficial for both. The main point is to use one that's sufficiently long enough for both parties to do whatever they need to do to close that transaction as cleanly as possible.
0 votes Thank Flag Link Thu Apr 7, 2011
SS -

From a buyer's perspective it is the cost of the loan. A lock in rate for 30 days is "normal". The longer you request a lock on the rate, the higher the potential cost of the loan. Now there is the potential that your loan lock expires and rates are lower but check with your loan officer to see the exact cost they would project for your specific situation.

CJ
Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Thu Apr 7, 2011
As a buyer it will cost more to lock your rate. Also if you go that long depending on pricing in the area if the underwriter wants an appraisal review toward's the end of the escrow process it may fail to the first one. I would say a 45 day is the better way to go.
0 votes Thank Flag Link Thu Apr 7, 2011
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