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

 McElroy & Associates can walk you through closing - 575 461-2100
Let's talk about "escrow". When you're closing on your new property, an escrow company is used to guarantee the process will close without problems and in a certain amount of time. A home is said to be in escrow when in the closing process, money is secured 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 obtains the buyer's payment, and then disburses the payment to the seller.

The escrow holder makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finished. This includes getting funds and documents, signing required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your place before the agreed upon price is fully paid.

Escrow agents want to acquire the following records:

  • 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
  • Tax statements

Upon finishing of all portions of the escrow, closing can take place. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The home's title goes to you and title insurance begins per the steps of your individual escrow agreement.

The escrow agent receives a payment when the closing is complete. As your agent, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Request title inquiry
  • Meet the bank's requirements as outlined in the escrow agreement
  • Accept payments from the buyer
  • Prorate interest, insurance, tax 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 complete
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Advise you - the escrow holder must maintain a neutral, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Petition title search
  • Comply with lender's standards 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 instructions of seller and buyer are complete
  • Disburse payments and finalize instructions
  • Advise you - the escrow agent has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is started to make payments for on-going expenses while there is a loan on the 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 might be slightly different depending on your bank and your escrow company.

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