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First-Time Home Buying: How To Close on a Place
Escrow: An escrow holder is used to assure your home closes on time and the closing process goes smoothly.
Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller.
For example, in a Web purchase, PayPal is the reliable third party that obtains the buyer's payment, and then hands over the money to the seller.
Settling the last details like obtaining funds, finishing forms, securing the documents for loans and liens, and making sure you get a clean title to the property before your purchase gets finalized are all parts of closing in which an escrow agent is useful.
The certificates the escrow agent may secure include:
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
Closing on the house takes place when all of the procedures of the escrow are done.
All payments owed and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
Title to the home is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow policy.
The escrow agent gets a payment when the closing is complete.
I'll keep you up-to-date on what comes next.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Write escrow instructions
- Perform a title inquiry
- Comply with lender's guidelines as written in the escrow agreement
- Receive funds from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been finished
- Disburse monies and finish instructions
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- Advise you - the escrow company stays at an impartial, third-party status
- Dispense opinions about future tax estimations
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Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
Now you know more about being in escrow. And, you can be a smarter home buyer and future homeowner.