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Steps to Closing on a House

 Berkshire Hathaway Home Services PenFed Realty can walk you through closing - 410-647-8000 ext. 817
Let's talk about "escrow". An escrow holder is brought on to assure your home closes on time and the process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in a Web transaction, PayPal is the secure third party that obtains the buyer's money, and then sends the payment to the seller.

The escrow company is careful to assure that all terms and conditions of the seller's and buyer's contract are reached prior to the sale being completed. This includes securing monies and documents, filling out required forms, and getting the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clean title to your place before the asking price is fully paid.

These are the legal documents that escrow holders usually look for:

  • 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

Closing on the home happens when the steps of the escrow are done. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. The property's title gets transferred to you and title insurance begins per the steps of your individual escrow agreement.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Petition title research
  • Comply with lender's guidelines as specified in the escrow agreement
  • Intake funds from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse funds and finish instructions

The Escrow Holder Won't:

  • Give advice - the escrow agent stays a neutral, third-party status
  • Give insight about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Request title search
  • Meet lender's guidelines as noted in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse payments and finish instructions
  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is started to pay on-going expenses while there is a loan on the house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

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

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