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

 Craig Jelinek - Sereno Group can walk you through closing - 408-335-1425
Let's talk about "escrow". An escrow company is hired to assure your place closes on time and the transaction goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an online transaction, PayPal is the reliable third party that obtains the buyer's payment, and then sends the payment to the seller.

The escrow holder makes sure that the terms and conditions of the agreement between the two parties are reached prior to the sale being finalized.

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

  • Requests for payment for various services to be paid out of escrow funds
  • Loan documents
  • Tax statements
  • Fire and other insurance policies
  • Title insurance policies
  • Terms of sale and any seller-assisted financing

You're ready to close when every step is complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then given to you as now current homeowner and correct title insurance is issued as noted in the escrow instructions.

When closing is finished, you'll make a payment to the escrow agent. 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 lender's guidelines as specified 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 are met
  • Disburse monies and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow company has to remain an impartial, third-party status
  • Offer opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Petition title search
  • Meet the bank's standards as specified in the escrow agreement
  • Accept payments 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 instructions of seller and buyer are complete
  • Disburse monies and finish instructions
  • Offer advice - the escrow company has to remain an impartial, third-party status
  • Dispense opinions about tax implications

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.

Now you know more about how to close on your future home. And, you can be a better informed home buyer and future homeowner.

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