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Buying Your Next Property: Closing
First, a little about "escrow". When you're closing on your new home, an escrow company is used to make sure the process will close appropriately and on time. Escrow holders hold money for "safe-keeping" in transactions between a buyer and seller. An easy way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.
Settling the last details like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clear title to the house prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.
These are the records that escrow holders usually compile:
- 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
- Loan documents
Closing on the property takes place when all of the procedures of the escrow are complete. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. Title to the property is then given to you as new homeowner and appropriate title insurance is issued as noted in the escrow policy.
The escrow agent gets a payment at the completion of closing. You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow guidelines
- Request title research
- Comply with the bank's standards as specified in the escrow agreement
- Accept payments from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are met
- Disburse monies and finalize instructions
- Advise you - the escrow holder has to remain an impartial, third-party status
- Dispense opinions about tax implications
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.
Now you know more about being in escrow. And, you can be a more informed home buyer and future homeowner.