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Steps to Closing on a Property
Escrow: An escrow agent is used to assure your place closes on time and the closing process goes smoothly. Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller. For example, in an Internet transaction, PayPal is the reliable third party that obtains the buyer's payment, and then hands over the money to the seller.
Clearing the final hurdles like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clean title to the home in preparation of your purchase gets finalized are all parts of closing in which an escrow company is useful.
These are the documents that escrow companies usually compile:
- 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
You're ready to close when every step is complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then transferred to you as new owner and correct title insurance is issued as noted in the escrow instructions.
When closing is done, you'll make a payment to the escrow company. As your real estate professional, I'll let you know what is an acceptable form of payment.
The Escrow Holder Will:
- Write escrow instructions
- Perform a title inquiry
- Meet the bank's requirements as written in the escrow agreement
- Receive payments from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer are met
- Disburse payments and finalize instructions
The Escrow Holder Will Not:
- Give advice - the escrow company has to remain an impartial, third-party status
- Offer opinions about tax implications
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The Escrow Holder Will:
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The Escrow Holder Won't:
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- Write escrow instructions
- Perform a title search
- Meet lender's standards as specified in the escrow agreement
- Receive payments from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been met
- Disburse payments and finish instructions
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- Offer advice - the escrow company has to remain an impartial, third-party status
- Offer opinions about the outcome of your taxes
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Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. 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 might be slightly different depending on your lender and your escrow company.