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

 Partnership Properties can walk you through closing - (662) 843-8850
Escrow: When you're closing on your new house, a neutral, third party (known as the escrow holder or the escrow agent) is used to make sure the process will close without problems and in a specific time frame. A property is said to be in escrow when in the closing process, payment is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in an Internet purchase, PayPal is the secure third party that holds the buyer's money, and then disburses the funds to the seller.

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

Escrow holders want to acquire the following legal documents:

  • 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. The house's title gets transferred to you and title insurance is issued per the steps of your particular escrow process.

The escrow holder gets a payment when the closing is complete. I'll keep you informed on the procedure.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Request title search
  • Comply with the bank's requirements as outlined in the escrow agreement
  • Intake payments from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse monies and finalize instructions

The Escrow Holder Will Not:

  • Give advice - the escrow company must stay at a fair, third-party status
  • Give insight about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Request title inquiry
  • Meet lender's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Request 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 agent must stay at a fair, third-party status
  • Give insight 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.

This is a easy to understand guide about the escrow process. Your individual methods may be different based on your bank and your escrow agent.

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