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First-Time Home Buying: How To Close on a Property

 Berkshire Hathaway Home Services Fox & Roach, REALTORS® can walk you through closing - 609.822.8700
Escrow: To finalize the sale of a property, a neutral, third party (the escrow holder) is employed to assure the process will close correctly and on time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a simple way to think of an escrow company.

The escrow company insures that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being completed. This includes receiving funds and documents, completing required forms, and getting the release documents for any loans or liens that have been paid with the transaction, assuring you have a clean title to your place before the negotiated price is fully paid.

These are the legal documents that escrow holders usually look to collect:

  • 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

You're ready to close when every step is complete in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You'll then obtain the title to the property and the title insurance gets dispersed as noted in the escrow instructions.

When closing is completely finished, you'll submit a payment to the escrow holder. As your agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Request title research
  • Comply with the bank's guidelines as specified in the escrow agreement
  • Receive 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 instructions of seller and buyer are complete
  • Disburse funds and finalize instructions

The Escrow Holder Will Not:

  • Advise you - the escrow company has to remain an impartial, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Request title search
  • Comply with the bank's requirements as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse funds and finalize instructions
  • Advise you - the escrow holder must maintain a neutral, 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. 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 individual process might vary depending on your lender and your escrow holder.

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