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First-Time Home Buying: How To Close on a Home
First, a little about "escrow". An escrow holder is used to assure your place closes on time and the money exchanging part of closing goes smoothly.
When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow.
PayPal is a good example of an escrow company.
The escrow holder 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 securing monies and certificates, signing required forms, and seeking out the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a free title to your property before the purchase price is fully paid.
These are the legal forms that escrow agents usually look for:
- 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
- Title insurance policies
Closing on the house happens when the steps of the escrow are complete.
All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
You'll then receive the title to the house and the title insurance gets issued as stated in the escrow instructions.
At the close of escrow, payments are submitted in an acceptable form to the escrow.
I'll keep you informed on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Perform a title inquiry
- Comply with lender's standards as specified in the escrow agreement
- Intake payments from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse funds and finalize instructions
- Offer advice - the escrow company must maintain a neutral, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
A Mortgage Escrow Account is established to make payments for on-going expenses while there is a loan on the house.
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.