The process of buying a home for the first time can be confusing. Let me help you.
Completing the Transaction
First, a little about "escrow". When you're closing on your new home, an escrow company is used to make certain the transaction will close appropriately and on time.
Escrow agents hold money for "safe-keeping" in a deal between a buyer and seller.
A simple way to think of what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are reached in preparation of the sale being completed.
Escrow holders look for the following 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
You're ready to close when every step is finished in escrow process.
At this time, all payments and fees for inspections, title insurance and real estate commissions are collected.
The house's title is given to you and title insurance begins per the steps of your individual escrow agreement.
The escrow company gets a payment at the completion of closing.
I'll keep you updated on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Request title research
- Comply with lender's guidelines as written in the escrow agreement
- Accept payments from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been finished
- Disburse monies and finish instructions
- Tell you what's best - the escrow company must maintain a neutral, third-party status
- Offer opinions about future tax estimations
Mortgage Escrow Account
A Mortgage Escrow Account is established to make payments for rolling fees while there is a loan on the house.
Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
Now you know more about being in escrow. And, you can be a smarter home buyer and future homeowner.