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Steps to Closing on a House

 Charise Michell, Estate Agent, Wish Sotheby’s International Realty, CalBRE#01425090 can walk you through closing - (818) 269-1966
First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your place closes on time and the money exchanging part of closing goes smoothly. A home is said to be in escrow when in the closing transaction, funds is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. For example, in a Web transaction, PayPal is the neutral third party that obtains the buyer's cash, and then hands over the money to the seller.

The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes securing payments and documents, finishing required forms, and obtaining the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your place before the asking price is fully paid.

These are the pieces of paperwork that escrow companies usually compile:

  • 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 completion of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. You'll then get the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.

The escrow company receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Request title research
  • Meet lender's requirements as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Advise you - the escrow company must maintain a neutral, third-party status
  • Dispense opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write 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 documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse funds and finish instructions
  • Give advice - the escrow holder must stay at a fair, third-party status
  • Give insight 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your specific plan will be unique depending on your lender and your escrow company.