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First-Time Home Buying: How To Close on a House
Let's talk about "escrow". When you're closing on your new house, an escrow agent is used to make certain the process will close appropriately and in a timely manner.
Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller.
PayPal is a simple way to think of an escrow company.
Settling the last details like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clean title to the property in preparation of your purchase gets finalized are all parts of closing in which an escrow agent is useful.
The documents the escrow company may secure 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
Closing on the home happens when all of the procedures of the escrow are complete.
All outstanding payments and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions).
The property's title is given to you and title insurance is issued per the steps of your individual escrow process.
At the close of escrow, payments are submitted in an acceptable form to the escrow.
As your agents, I'll let you know what is an acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title inquiry
- Comply with the bank's requirements as noted in the escrow agreement
- Receive payments from the buyer
- Prorate interest, insurance, tax and other payments according to guidelines
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer are met
- Disburse payments and finish instructions
- Give advice - the escrow company stays a neutral, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
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.