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

 Latte Stone Properties, LLC can walk you through closing - (671) 647-5577
First, a little about "escrow". An escrow holder is used to assure your house closes on time and the closing process goes smoothly. Escrow agents hold money for "safe-keeping" in a deal between a buyer and seller. A simple way to understand the concept of what an escrow company does is to compare it to PayPal for Internet purchases.

The escrow company makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being completed. This includes securing monies and certificates, filling out required forms, and getting the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clear title to your property before the agreed upon price is fully paid.

Escrow companies collect the following records:

  • 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 portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as now current homeowner and related title insurance is issued as outlined in the escrow policy.

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:

  • Assemble escrow instructions
  • Perform a title search
  • Meet the bank's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse payments and finalize instructions

The Escrow Holder Will Not:

  • Tell you what's best - the escrow agent must maintain a neutral, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Perform a title search
  • Comply with the bank's guidelines as written in the escrow agreement
  • Accept payments from the buyer
  • Prorate insurance, tax, interest 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 have been met
  • Disburse monies and finalize instructions
  • Offer advice - the escrow company stays a neutral, third-party status
  • Dispense opinions about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a easy to understand guide about the escrow process. Your specific process could be unique depending on your lender and your escrow holder.

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