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First-Time Home Buying: Closing
First, a little about "escrow". When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to ensure the transaction will close correctly and in a specific time frame. Escrow holders hold money for "safe-keeping" in an exchange 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 seller and buyer are performed in preparation of the sale being completed.
These are the pieces of paperwork that escrow agents usually compile:
- 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
- Fire and other insurance policies
- Title insurance policies
You're ready to close when all steps are finished in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. The house's title gets transferred to you and title insurance begins per the steps of your particular escrow agreement.
At the close of escrow, payments are submitted in an acceptable form to the escrow. I'll keep you informed on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Petition title inquiry
- Meet lender's guidelines as outlined in the escrow agreement
- Receive payments 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 terms of agreement of seller and buyer are met
- Disburse monies and finish instructions
- Offer advice - the escrow agent stays at an impartial, 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
Now you know more about how to close on your future home. And, you can be a more informed home buyer and future homeowner.