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First-Time Home Buying: How To Close on a Place
Let's talk about "escrow". When you're closing on your new property, an escrow agent is used to insure the transaction will close without problems and in a timely manner. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet purchase, PayPal is the reliable third party that obtains the buyer's funds, and then sends the funds to the seller.
The escrow holder makes sure that the terms and conditions of the agreement between the two parties are reached in preparation of the sale being finished.
The records the escrow agent may obtain include:
- 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
- Loan documents
You're ready to close when all steps are finished in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then given to you as buyer and correct title insurance is issued as noted in the escrow policy.
The escrow company receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Petition title research
- Comply with lender's guidelines as noted in the escrow agreement
- Intake payments from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse monies and finish instructions
- Tell you what's best - the escrow agent must maintain a neutral, third-party status
- Dispense opinions about future tax estimations
Mortgage Escrow Account
A Mortgage Escrow Account is established to make payments for recurring fees while there is a loan on the house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
Now you know more about being in escrow. And, you can be a more confident home buyer and future homeowner.