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

 VIP Realtors can walk you through closing - 239-472-5187 x 331
First, a little about "escrow". To finish the sale of a house, a neutral, third party (the escrow holder) is employed to assure the process will close perfectly and on time. Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller. For example, in a Web auction, PayPal is the neutral third party that holds the buyer's funds, and then disburses the funds to the seller.

The escrow holder insures that all terms and conditions of the seller's and buyer's contract are met prior to the sale being completed. This includes receiving monies and certificates, signing required forms, and getting the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your house before the agreed upon price is fully paid.

Escrow companies want to obtain the following legal documents:

  • 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

Upon completion of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. Title to the property is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow instructions.

At the close of escrow, payments are submitted in an acceptable form to the escrow. I'll keep you up-to-date on the procedure.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Perform a title inquiry
  • Comply with lender's guidelines as written in the escrow agreement
  • Intake funds 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 have been met
  • Disburse funds and finish instructions

The Escrow Holder Will Not:

  • Advise you - the escrow holder stays a neutral, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Request title research
  • Meet the bank's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse monies and finalize instructions
  • Advise you - the escrow company has to remain an impartial, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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.

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