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Steps to Closing on a House
Escrow: When you're closing on your new property, an escrow holder is used to make certain the transaction will close properly and in a certain amount of time.
A house is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties when the exchange of money takes place.
PayPal is a simple way to think of an escrow company.
Tying up any loose ends like taking in funds, completing forms, obtaining the documents for loans and liens, and assuring you get a clean title to the house in preparation of your purchase gets finalized are all parts of closing in which an escrow agent is useful.
These are the legal forms that escrow agents usually look to collect:
- Loan documents
- 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
Closing on the home takes place when the steps of the escrow are done.
At this time, all payments and dues for inspections, title insurance and real estate commissions are taken.
The property's title goes to you and title insurance begins per the policies of your individual escrow agreement.
When closing is completely finished, you'll pay the fees to the escrow company.
You'll know when it's time to submit the form of payment.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Prepare escrow guidelines
- Request title inquiry
- Meet lender's standards as written in the escrow agreement
- Accept 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 are met
- Disburse funds and finalize instructions
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- Advise you - the escrow agent stays a neutral, third-party status
- Offer opinions about tax implications
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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 specific process might be different based on your bank and your escrow company.