Whether it's your first property or your next house, I'll walk you through the process.
First-Time Home Buying: How To Close on a Place
First, a little about "escrow". An escrow holder is hired to assure your property closes on time and the closing process goes smoothly.
A home is said to be in escrow when in the closing process, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place.
PayPal is a simple way to think of an escrow company.
Clearing the final hurdles like receiving funds, completing forms, securing the documents for loans and liens, and assuring you get a clean title to the property before your purchase gets finalized are all parts of closing in which an escrow holder is useful.
The records the escrow company may collect include:
- 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
- Loan documents
Upon finishing of all instructions of the escrow, closing can take place.
At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out.
The property's title gets handed over to you and title insurance begins per the policies of your particular escrow agreement.
At the close of escrow, fees are paid in an acceptable form to the escrow.
You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow instructions
- Petition title research
- Comply with lender's requirements as written in the escrow agreement
- Receive payments from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse monies and finalize instructions
- Offer advice - the escrow agent stays a neutral, third-party status
- Offer opinions about the outcome of your taxes
Mortgage Escrow Account
A Mortgage Escrow Account is used to pay on-going expenses while there is a loan on the house.
Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
Once you're comfortable with the escrow process, you can be a confident buyer.