Whether it's your first house or your next home, I'll advise you through the process.
First-Time Home Buying: How To Close on a House
First, a little about "escrow". An escrow company is hired to assure your house closes on time and the process goes smoothly.
A property is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties when the exchange of money takes place.
For example, in a Web transaction, PayPal is the secure third party that holds the buyer's funds, and then sends the payment to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being finalized. This includes securing payments and records, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you have a free title to your place before the agreed upon price is fully paid.
Escrow companies collect the following legal documents:
- 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
Closing on the home takes place when the steps of the escrow are finished.
All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
Title to the home is then transferred to you as new owner and correct title insurance is issued as noted in the escrow policy.
When closing is completely finished, you'll make a payment to the escrow holder.
I'll keep you informed on what comes next.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Petition title inquiry
- Meet the bank's standards as specified in the escrow agreement
- Intake funds from the buyer
- Prorate interest, insurance, tax and other payments according to instructions
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse payments and finish instructions
- Advise you - the escrow holder must stay at a fair, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
This is a simple outline of the escrow process. Your individual plan might be different depending on your lender and your escrow agent.