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Buying Your Next Home: Closing
Escrow: When you're closing on your new place, an escrow holder is used to make certain the transaction will close without problems and in a certain amount of time.
When money is held by a third party in a transaction between a buyer and a seller, it's in escrow.
PayPal is a simple way to think of an escrow company.
The escrow agent makes sure that the terms and conditions of the agreement between the two parties are met in preparation of the sale being completed.
The documents the escrow company may collect include:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
You're ready to close when each step of the finished in escrow process.
At this time, all payments and dues for inspections, title insurance and real estate commissions are taken.
The property's title goes to you and title insurance is issued per the steps of your particular escrow agreement.
When closing is completed, you'll make a payment to the escrow holder.
I'll keep you informed on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Perform a title inquiry
- Meet the bank's requirements as written in the escrow agreement
- Receive funds from the buyer
- Prorate interest, insurance, tax and other payments according to instructions
- Record deeds and other documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer are met
- Disburse funds and finalize instructions
- Offer advice - the escrow holder must maintain a neutral, third-party status
- Give insight about future tax estimations
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
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.