Whether it's your first home or your next place, I'll educate you through the process. E-mail me at christybishop@comcast.net .

First-Time Home Buying: Closing

 Berkshire Hathaway Home Services PenFed Realty can walk you through closing - 410-647-8000 ext. 817
Escrow: To finish the sale of a place, a neutral, third party (the escrow holder) is brought into the picture to assure the process will close correctly and on time. A property is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. An easy way to understand what an escrow company does is to think of the use of PayPal for Internet purchases.

The escrow agent makes sure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finished. This includes getting funds and documents, completing required forms, and getting the release documents for any loans or liens that are to be paid with the transaction, assuring you have a free title to your home before the agreed upon price is fully paid.

Escrow holders want to obtain 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

Closing on the property takes place when the steps of the escrow are complete. All payments owed and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

At the close of escrow, fees are paid in an acceptable form to the escrow. As your real estate professional, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

  • Write escrow guidelines
  • Petition title inquiry
  • Meet lender's requirements as outlined in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • 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 monies and finalize instructions

The Escrow Holder Will Not:

  • Advise you - the escrow agent must maintain a neutral, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Perform a title inquiry
  • Meet lender's requirements 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 met
  • Disburse funds and finalize instructions
  • Offer advice - the escrow holder stays at an impartial, third-party status
  • Offer 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. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Once you have the ABCs of the escrow process down, you can be a more assured buyer.

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