Whether it's your first house or your next place, We'll advise you through the process. E-mail us at
joeminotto@gmail.com to get some free information.
First-Time Home Buying: Closing
First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your home closes on time and the money exchanging part of closing goes smoothly. A home is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties when the transaction is taking place. A simple way to understand the concept of what an escrow company does is to compare it to PayPal for Internet purchases.
Clearing the final hurdles like obtaining funds, finishing forms, getting the documents for loans and liens, and making sure you get a clean title to the property prior to your purchase gets finalized are all part of the job of the escrow holder.
Escrow companies look for the following legal documents:
- 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
- Loan documents
- Tax statements
You're ready to close when every step is finished in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets issued as stated in the escrow instructions.
The escrow company gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.
|
The Escrow Holder Will: |
|
The Escrow Holder Won't: |
- Prepare escrow instructions
- Perform a title search
- Comply with lender's standards as specified in the escrow agreement
- Receive funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse funds and finish instructions
|
|
- Offer advice - the escrow company stays a neutral, third-party status
- Give insight about tax implications
|
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.
Once you're at ease with the escrow process, you can be a informed buyer.