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

 Roxanne Mercer Real Estate can walk you through closing - (707) 318-8829
Escrow: When you're closing on your new home, an escrow holder is used to guarantee the process will close without problems and in a specific time frame. A home is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties when the exchange of money takes place. An easy way to understand the concept of what an escrow company does is to think of the use of PayPal for Internet purchases.

The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finalized. This includes getting funds and records, filling out required forms, and seeking out the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your property before the negotiated price is fully paid.

These are the records that escrow companies usually compile:

  • 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 completion of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then obtain the title to the home and the title insurance gets issued as outlined in the escrow instructions.

The escrow company gets a payment at the completion of closing. I'll keep you updated on what comes next.

The Escrow Holder Will:

  • Write escrow instructions
  • Petition title search
  • Meet lender's requirements as written 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
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Request title inquiry
  • Meet lender's requirements as specified in the escrow agreement
  • Receive funds from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse funds and finalize instructions
  • Tell you what's best - the escrow holder has to remain 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. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

Now you know more about being in escrow. And, you can be a better informed home buyer and future homeowner.

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