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First-Time Home Buying: Closing

 

Let's talk about "escrow". When you're closing on your new home, an escrow holder is used to assure the process will close appropriately and in a specific time frame. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a good example of an escrow company.

 

The escrow agent insures that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finalized. This includes receiving funds and certificates, signing required forms, and obtaining the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a free title to your place before the negotiated price is fully paid.

 

Escrow holders want to acquire the following pieces of paperwork:

  • 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 portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the house and the title insurance gets issued as agreed upon in the escrow instructions.

 

The escrow agent receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.

 

 

      The Escrow Holder Will:

                                                                                                                                 

  • Prepare escrow instructions                                                                               

  • Offer advice - the escrow holder must stay at a fair, third-party status

  • Perform a title inquiry

  • Comply with lender's requirements as outlined in the escrow agreement

  • Receive funds from the buyer

  • Prorate interest, insurance, tax and other payments according to guidelines

  • Record deeds and other documents as instructed

  • Request title insurance policy

  • Close escrow when all terms of agreement of seller and buyer are complete

  • Disburse payments and finish instructions

      The Escrow Holder Won't:

 

  • Offer advice - the escrow holder must stay at a fair, third-party status

  • Dispense opinions about the outcome of your taxes

 

Mortgage Escrow Account

 

A Mortgage Escrow Account is used to make payments for recurring expenses while there is a loan on the house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Once you have the rules of the escrow process down, you can be a better buyer.