First-Time Home Buying: Closing

Escrow
When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to guarantee the transaction will close properly and in a specific time frame. A property is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of two parties when the exchange of money takes place. An easy way to understand what an escrow company does is to think of the use of PayPal for Internet purchases.

The escrow company makes sure that the terms and conditions of the agreement between the sellers and the buyers are completed in preparation of the sale being finished.

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These are the pieces of paperwork that escrow companies usually compile: 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 Terms of sale and any seller-assisted financing

Upon finishing of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the home and the title insurance gets issued as outlined in the escrow instructions.

At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you coach you on the on the next steps.

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow guidelines Request title research Meet the bank's standards as written in the escrow agreement Receive payments from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other legal documents as instructed Request title insurance policy Close escrow when all instructions of seller and buyer have been finished Disburse funds and finish instructions		Advise you - the escrow company must maintain a neutral, third-party status Offer opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay rolling expenses while there is a loan on the 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.

Once you have the basics of the escrow process down, you can be a better buyer.