Buying Your Next Place: Closing
An escrow holder is hired to assure your house closes on time and the closing process goes smoothly. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet transaction, PayPal is the reliable third party that holds the buyer's money, and then hands over the payment to the seller.
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 finished. This includes receiving funds and documents, filling out required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your place before the final price is fully paid.
The records the escrow holder may obtain include:
- Loan documents
- 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
Closing on the house takes place when all of the procedures of the escrow are finished. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. Title to the property is then transferred to you as now current homeowner and appropriate title insurance is issued as noted in the escrow policy.
The escrow company gets a payment when the closing is complete. As your real estate professional, I'll let you know what is an acceptable form of payment.
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
This is a simple outline of the escrow process. Your particular methods may be unique depending on your bank and your escrow holder.