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Buying Your Next Property: Closing
Let's talk about "escrow". When you're closing on your new property, an escrow agent is used to assure the process will close correctly and in a timely manner.
A house is said to be in escrow when in the closing transaction, payment is held 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 simple way to think of an escrow company.
The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finalized. This includes securing monies and documents, filling out required forms, and getting the release documents for any loans or liens that are to be paid with the transaction, assuring you have a free title to your place before the final price is fully paid.
Escrow agents collect the following records:
- 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
- Title insurance policies
Closing on the home takes place when all of the procedures of the escrow are complete.
All payments owed and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
You'll then obtain the title to the property and the title insurance gets dispersed as noted in the escrow instructions.
The escrow holder receives a payment when the closing is complete.
As your agent, I'll inform you of the acceptable form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow instructions
- Request title search
- Meet lender's requirements as outlined in the escrow agreement
- Intake funds from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are met
- Disburse payments and finish instructions
- Tell you what's best - the escrow holder must maintain a neutral, third-party status
- Offer opinions 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.
Now you know more about how to close on your future home. And, you can be a better informed home buyer and future homeowner.