Purchasing real estate for the first time can be confusing. I can help.
and I'll help you become a well-informed buyer.
First-Time Home Buying: Closing
Let's talk about "escrow". When you're closing on your new place, an escrow company is used to ensure the process will close correctly and in a specific time frame.
Escrow companies hold money for "safe-keeping" in an exchange between a buyer and seller.
For example, in an online auction, PayPal is the secure third party that holds the buyer's funds, and then hands over the payment to the seller.
The escrow agent makes sure that the terms and conditions of the agreement between the two parties are reached in preparation of the sale being finalized.
These are the legal forms that escrow holders usually compile:
- 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
Closing on the house happens when the steps of the escrow are complete.
At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out.
The home's title goes to you and title insurance begins per the policies of your particular escrow agreement.
When closing is in it's last step, you'll pay the fees to the escrow company.
As your real estate agent, I'll let you know what is an acceptable form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Petition title research
- Meet lender's requirements as noted in the escrow agreement
- Receive payments from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been met
- Disburse payments and finish instructions
- Advise you - the escrow holder must maintain a neutral, third-party status
- Dispense opinions about the outcome of your taxes
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 smarter home buyer and future homeowner.