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

Escrow
An escrow company is hired 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. An everyday way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.

Settling the last details like receiving funds, signing forms, securing the documents for loans and liens, and making sure you a clean title to the home in preparation of your purchase gets finalized are all part of the job of the escrow holder.

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The certificates the escrow company may collect include: 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 Tax statements Fire and other insurance policies

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments 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 home and the title insurance gets dispersed as outlined in the escrow instructions.

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:		The Escrow Holder Won't:
Write escrow instructions Perform a title inquiry Comply with the bank's requirements as outlined in the escrow agreement Intake funds 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 terms of agreement of seller and buyer have been met Disburse funds and finalize instructions		Give advice - the escrow company must stay at a fair, third-party status Offer opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay on-going fees while there is a loan on the house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your individual plan might vary depending on your lender and your escrow company.