First-Time Home Buying: How To Close on a Place
Escrow
To finalize the sale of a property, a neutral, third party (the escrow company) is engaged to assure the transaction will close properly and on time.
Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller.
A simple way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being finalized. This includes securing monies and paperwork, completing required forms, and obtaining the release documents for any loans or liens that are to be paid with the transaction, assuring you have a clear title to your property before the negotiated price is fully paid.
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Don't let real estate industry jargon keep you from becoming a homeowner. I can help you understand the process.
E-mail me at Tyna@homesbyty.com.
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Escrow companies want to acquire the following pieces of paperwork:
- 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
- Fire and other insurance policies
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You're ready to close when all steps are finished in escrow process.
All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
You'll then get the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
When closing is completed, you'll submit a payment to the escrow holder.
I'll keep you updated on what comes next.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Write escrow instructions
- Request title research
- Meet the bank's standards as outlined in the escrow agreement
- Intake 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 terms of agreement of seller and buyer are met
- Disburse monies and finalize instructions
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- Offer advice - the escrow holder must stay at a fair, third-party status
- Dispense 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.
Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
This is a quick run-down of the escrow process. Your particular methods may be different depending on your lender and your escrow holder.
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