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Steps to Closing on a Home
To complete the sale of a property, a neutral, third party (the escrow holder) is employed to assure the transaction will close properly and on time.
A place is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place.
PayPal is a good way to picture an escrow company.
The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are reached in preparation of the sale being finished.
These are the records that escrow agents usually look for:
- Loan documents
- 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
Closing on the house takes place when the steps of the escrow are complete.
All expenses like title insurance, inspections and real estate commissions are paid.
The home's title is given to you and title insurance begins per the policies of your individual escrow process.
When closing is completely finished, you'll pay the fees to the escrow holder.
You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow guidelines
- Perform a title research
- Meet lender's guidelines as specified in the escrow agreement
- Accept funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are met
- Disburse funds and finalize instructions
- Offer advice - the escrow agent stays a neutral, third-party status
- Dispense opinions about future tax estimations
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
Once you're comfortable with the escrow process, you can be a confident buyer.