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Steps to Closing on a House

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First, a little about "escrow". When you're closing on your new house, an escrow company is used to guarantee the transaction will close appropriately 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. PayPal is a simple way to think of an escrow company.

The escrow agent makes sure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finalized. This includes receiving funds and records, filling out required forms, and seeking out the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clean title to your house before the asking price is fully paid.

Escrow companies want to acquire the following documents:

  • 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
  • Tax statements

Upon finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as new owner and appropriate title insurance is issued as noted in the escrow policy.

When closing is finished, you'll pay the fees to the escrow agent. I'll keep you informed on the next steps.

The Escrow Holder Will:

  • Write escrow instructions
  • Request title research
  • Comply with the bank's guidelines as outlined in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer have been finished
  • Disburse funds and finalize instructions

The Escrow Holder Will Not:

  • Advise you - the escrow agent has to remain an impartial, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Request title inquiry
  • Meet the bank's requirements as noted in the escrow agreement
  • Intake funds from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other documents 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 stays at an impartial, third-party status
  • Offer opinions about future tax estimations

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

This is a simple outline of the escrow process. Your particular process could be unique depending on your bank and your escrow agent.

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