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First-Time Home Buying: Closing

 Berkshire Hathaway Home Services PenFed Realty can walk you through closing - 410-647-8000 ext. 817
Let's talk about "escrow". To finish the sale of a house, a neutral, third party (the escrow agent) is engaged to assure the transaction will close perfectly and on time. Escrow companies hold money for "safe-keeping" in an exchange between a buyer and seller. For example, in a Web purchase, PayPal is the neutral third party that obtains the buyer's cash, and then sends the money to the seller.

The escrow company insures that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being completed. This includes getting payments and paperwork, filling out required forms, and getting the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your place before the agreed upon price is fully paid.

The documents the escrow holder may obtain include:

  • 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
  • Loan documents

Upon finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as buyer and correct title insurance is issued as noted in the escrow instructions.

When closing is finished, you'll submit a payment to the escrow holder. As your agent, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Request title research
  • Comply with the bank's requirements as outlined in the escrow agreement
  • Receive funds from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been finished
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Request title research
  • Meet the bank's standards as outlined 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
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse monies and finalize instructions
  • Tell you what's best - the escrow agent stays at an impartial, third-party status
  • Offer opinions about the outcome of your taxes

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

This is a easy to understand guide about the escrow process. Your particular process may be slightly different based on your bank and your escrow holder.

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