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First-Time Home Buying: How To Close on a Place
Let's talk about "escrow". When you're closing on your new place, an escrow company is used to insure the process will close appropriately and on time.
Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller.
PayPal is a good example of an escrow company.
The escrow company makes sure that the terms and conditions of the agreement between the sellers and the buyers are reached in preparation of the sale being finalized.
These are the legal documents that escrow holders usually compile:
- 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
Upon finishing of all instructions of the escrow, closing can take place.
All payments owed and fees are taken 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 instructions.
When closing is completed, you'll submit a payment to the escrow agent.
We'll keep you updated on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Perform a title research
- Comply with lender's standards as outlined in the escrow agreement
- Receive payments from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been met
- Disburse funds and finish instructions
- Offer advice - the escrow holder stays a neutral, third-party status
- Dispense opinions about future tax estimations
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.
Now you know more about how to close on your future home. And, you can be a more confident home buyer and future homeowner.