First-Time Home Buying: Closing

Escrow
An escrow agent is hired to assure your property closes on time and the closing process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. PayPal is a simple way to think of an escrow company.

The escrow holder makes sure that the terms and conditions of the agreement between the sellers and the buyers are performed in preparation of the sale being finalized.

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These are the legal documents that escrow agents usually compile: 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 Terms of sale and any seller-assisted financing

Closing on the property happens when the steps of the escrow are done. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). The home's title goes to to you and title insurance is issued per the steps of your individual escrow process.

At the close of escrow, payments of funds are 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:
Assemble escrow instructions Request title research Meet lender's standards as specified in the escrow agreement Intake payments 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 have been finished Disburse payments and finalize instructions		Tell you what's best - the escrow company stays a neutral, third-party status Give insight about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay on-going fees while there is a loan on the 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 individual methods will be different depending on your bank and your escrow agent.