With regional banks in trouble, the money waiting to complete local home sales could be under-insured.
made the news over their stock price volatility.Today, we turn our attention to escrow trust accounts, which do not offer any additional layers of FDIC protection when buying or selling a home than traditional checking, savings and money market accounts. It’s all the same.
“The average deposit is 3% of the sales price,” said Felton. For example, on a $1 million sales price, 3% would be $30,000.Well, the borrower will need to bring in the rest of the down payment and deposit it into escrow before the lender funds the loan. How much could that be? A lot!Say the borrower’s mortgage is $600,000, meaning they’re putting down an impressive $370,000 in addition to the initial earnest money deposit. Don’t forget about buyers’ side closing costs, too.
So, be sure to check out the escrow company and not just the bank. Under federal law, the buyer chooses their settlement servicer. In practice, it’s the real estate agents or builder who steers this business.Southern California resale real estate transactions are arranged through escrow companies licensed and regulated by the Department of Financial Protection and Innovation.
Escrow companies licensed by DFPI must go through what seems like a Secret Service-type background check prior to licensing. And all workers must have their information submitted to the DFPI within 10 days of employment. America has a plethora of economic headwinds right now. To name just three, we have a debt ceiling coming due with congressional Democrats and Republicans playing chicken with each other. The Federal Reserve is struggling with ways to tame inflation-increasing the prime borrowing rate on May 3 to 8.25%. And, Wall Street has major concerns about the stability of the banking system.
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