Buying Your Next Property: Closing
Let’s talk about “escrow”. When you’re closing on your new property, an escrow agent is used to ensure the transaction will close properly and in a specific time frame. When payment is held by a third party in a transaction between a buyer and a seller, it’s in escrow. A simple way to understand the concept of what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow holder is careful to assure that all terms and conditions of the seller’s and buyer’s agreement are reached prior to the sale being finalized. This includes securing payments and documents, finishing required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your property before the agreed upon price is fully paid.
Escrow holders look for the following records:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies financing
- Requests for payment for various services to be paid out of escrow funds
Closing on the house takes place when all the procedures of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. You’ll then get the title to the property and the title insurance gets issued as outlined in the escrow instructions.
When closing is completed, you’ll make a payment to the escrow agent. As your real estate professional, I’ll inform you of the acceptable form of payment.
The Escrow Holder Will:
|The Escrow Holder Won’t:|
• Write escrow guidelines
• Petition title research
• Comply with lender’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 legal documents as instructed
• Request title insurance policy
• Close escrow when all instructions of seller and buyer are complete
• Disburse funds and finalize instructions
• Tell you what’s best – the escrow agent stays a neutral, third-party status
• Offer 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. 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.
Now you know more about being in escrow. And, you can be a more confident home buyer and future homeowner.