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

 Betty McCall-Vernaglia can walk you through closing - (508) 533-6100
First, a little about "escrow". When you're closing on your new property, an escrow holder is used to make certain the transaction will close without problems and on time. A house is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties when the transaction is taking place. A simple way to understand what an escrow company does is to compare it to PayPal for online purchases.

The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being completed. This includes getting monies and records, filling out required forms, and getting the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your property before the final price is fully paid.

Escrow agents want to acquire the following pieces of paperwork:

  • 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 finishing of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The home's title goes to you and title insurance begins per the steps of your individual escrow process.

At the close of escrow, fees are paid in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Perform a title search
  • Meet the bank's requirements as written in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees 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 have been met
  • Disburse payments and finalize instructions

The Escrow Holder Will Not:

  • Advise you - the escrow agent must maintain a neutral, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Request title inquiry
  • Comply with lender's standards as noted in the escrow agreement
  • Accept funds from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents 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 company stays a neutral, third-party status
  • Give insight 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. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

Once you have the basics of the escrow process down, you can be a confident buyer.

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