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Steps to Closing on a House
Let's talk about "escrow". When you're closing on your new place, an escrow company is used to insure the transaction will close properly and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a good way to picture an escrow company.
The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are performed prior to the sale being completed.
These are the pieces of paperwork that escrow holders usually look to collect:
- 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
Upon completion of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. The property's title is given to you and title insurance begins per the policies of your individual escrow process.
At the close of escrow, in an acceptable form to the escrow. As your real estate agents, we'll let you know what is an acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow guidelines
- Petition title search
- Comply with lender's standards as written in the escrow agreement
- Intake funds from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse funds and finalize instructions
- Offer advice - the escrow agent must stay at a fair, third-party status
- Dispense opinions about the outcome of your taxes
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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 vary depending on your bank and your escrow company.