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

 Homes With Heart, Inc. can walk you through closing - 512-789-7541
Escrow: When you're closing on your new place, an escrow holder is used to make certain the process will close appropriately and in a specific time frame. 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 holder is careful to assure that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finalized. This includes getting funds and documents, finishing required forms, and getting the release documents for any loans or liens that were paid with the transaction, assuring you have a free title to your place before the asking price is fully paid.

The certificates the escrow holder may secure 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 home takes place when the steps of the escrow are finished. All expenses like title insurance, inspections and real estate commissions are paid. The house's title goes to you and title insurance begins per the policies of your particular escrow process.

When closing is completed, you'll submit a payment to the escrow holder. I'll keep you informed on what comes next.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Petition title research
  • Comply with lender's requirements as written in the escrow agreement
  • Accept payments from the buyer
  • Prorate insurance, tax, interest and other payments 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 finished
  • Disburse payments and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow company stays a neutral, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Petition title inquiry
  • Comply with lender's standards as noted in the escrow agreement
  • Receive funds from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been finished
  • Disburse payments and finish instructions
  • Tell you what's best - the escrow holder must stay at a fair, 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your individual plan might vary depending on your bank and your escrow company.