Steps to Closing on a Property
Escrow: When you’re closing on your new property, an escrow holder is used to guarantee the process will close without problems and on time. Escrow agents hold money for “safe-keeping” in transactions between a buyer and seller. PayPal is a good way to picture an escrow company.
The escrow agent 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 receiving monies and records, signing required forms, and getting 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 negotiated price is fully paid.
These are the documents that escrow companies usually look for:
- 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
You’re ready to close when all parts are finished in escrow process. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to you as now current homeowner and correct title insurance is issued as noted in the escrow policy.
The escrow holder gets a payment at the completion of closing. As your real estate agent, I’ll let you know what is an acceptable way of paying.
The Escrow Holder Will:
- Write escrow instructions
- Perform a title research
- Meet the bank’s guidelines as noted in the escrow agreement
- Intake funds from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse monies and finish instructions
- Prepare escrow guidelines
- Petition title research
- Meet lender’s requirements as written in the escrow agreement
- Accept funds from the buyer
- Prorate interest, insurance, tax and other payments according to instructions
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse monies and finish instructions
The Escrow Holder Won’t:
- Offer advice – the escrow holder must maintain a neutral, third-party status
- Offer opinions about future tax estimations
- Tell you what’s best – the escrow agent has to remain an impartial, third-party status
- Dispense 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 quick run-down of the escrow process. Your specific methods will be different based on your bank and your escrow agent.