Don't let real estate industry jargon prevent you from becoming a homeowner. I can help you work your way through the process.
Steps to Closing on a Home
Let's talk about "escrow". An escrow agent is brought on to assure your house closes on time and the closing process goes smoothly.
A house is said to be in escrow when in the closing process, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place.
PayPal is a simple way to think of an escrow company.
Clearing the final hurdles like receiving funds, completing 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 part of the job of the escrow holder.
Escrow companies look for the following forms:
- 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
- Fire and other insurance policies
- Title insurance policies
Upon finishing of all portions of the escrow, closing can take place.
At this time, all payments and dues for inspections, title insurance and real estate commissions are collected.
You'll then receive the title to the home and the title insurance gets issued as noted in the escrow instructions.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow.
You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title inquiry
- Meet lender's standards as written in the escrow agreement
- Receive payments from the buyer
- Prorate interest, insurance, tax and other payments 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 monies and finish instructions
- Advise you - the escrow agent has to remain an impartial, third-party status
- Give insight about future tax estimations
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
Once you have the basics of the escrow process down, you can be a more assured buyer.