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Steps to Closing on a House
Let's talk about "escrow". When you're closing on your new place, an escrow company is used to guarantee the process will close properly and in a certain amount of time.
When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow.
For example, in an Internet transaction, PayPal is the secure third party that obtains the buyer's cash, and then sends the funds to the seller.
Tying up any loose ends like obtaining 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 agent is useful.
The documents the escrow holder may secure include:
- 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
- Fire and other insurance policies
You're ready to close when each step of the complete in escrow process.
All expenses like title insurance, inspections and real estate commissions are paid.
Title to the property is then transferred to you as buyer and appropriate title insurance is issued as noted in the escrow instructions.
When closing is finished, you'll pay the fees to the escrow agent.
I'll keep you up-to-date on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title research
- Meet the bank's standards as noted in the escrow agreement
- Intake payments from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse funds and finalize instructions
- Advise you - the escrow agent stays a neutral, third-party status
- Give insight about tax implications
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.
This is a simple outline of the escrow process. Your specific methods may be slightly different depending on your lender and your escrow company.