First-Time Home Buying: How To Close on a Home

Escrow
To finalize the sale of a home, a neutral, third party (the escrow company) is engaged to assure the transaction will close correctly and on time. A house is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties when the transaction is taking place. For example, in an online purchase, PayPal is the secure third party that holds the buyer's money, and then disburses the payment to the seller.

Clearing the final hurdles like taking in funds, finishing forms, securing the documents for loans and liens, and assuring you a clear title to the property prior to your purchase gets finalized are all parts of closing in which an escrow agent is useful.

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The records the escrow company may collect include: 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

Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then get the title to the property and the title insurance gets dispersed as outlined in the escrow instructions.

The escrow agent receives a payment when the closing is complete. As your agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow instructions Perform a title search Meet lender's requirements as noted in the escrow agreement Intake funds from the buyer Prorate insurance, tax, interest and other payments according to instructions Record deeds and other documents as instructed Obtain title insurance policy Close escrow when all instructions of seller and buyer have been met Disburse funds and finish instructions		Offer advice - 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. 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 smarter home buyer and future homeowner.