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

 Rhodes & Associates Realty can walk you through closing - (314) 252-8955
Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your place closes on time and the money exchanging part of closing goes smoothly. A place is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of a buyer and a seller when the transaction is taking place. PayPal is a good way to picture an escrow company.

The escrow holder makes sure that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being finalized. This includes securing payments and certificates, completing 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 property before the final price is fully paid.

The pieces of paperwork the escrow holder may secure 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 finishing of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. You'll then obtain the title to the house and the title insurance gets issued as noted in the escrow instructions.

When closing is done, you'll make a payment to the escrow agent. As your agent, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Request title search
  • Meet the bank's requirements as noted in the escrow agreement
  • Receive funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other legal documents as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse payments and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow agent has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Request title inquiry
  • Comply with lender's standards as specified in the escrow agreement
  • Intake payments from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other documents 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 agent stays at 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. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

This is a quick run-down of the escrow process. Your individual plan will be slightly different based on your lender and your escrow agent.

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