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First-Time Home Buying: Closing

 Charise Michell, Estate Agent, Wish Sotheby’s International Realty, CalBRE#01425090 can walk you through closing - (818) 269-1966
Escrow: An escrow holder is used to assure your home closes on time and the closing process goes smoothly. A property is said to be in escrow when in the closing process, payment is secured by a third party on behalf of a buyer and a seller when the exchange of money takes place. For example, in a Web auction, PayPal is the secure third party that holds the buyer's money, and then hands over the funds to the seller.

The escrow company 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 receiving payments and documents, signing required forms, and getting the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clean title to your property before the purchase price is fully paid.

These are the pieces of paperwork that escrow holders 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

Closing on the property takes place when all of the procedures of the escrow are finished. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then transferred to you as buyer and appropriate title insurance is issued as outlined in the escrow policy.

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

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Perform a title search
  • Meet lender's guidelines as noted in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse funds and finalize instructions

The Escrow Holder Will Not:

  • Advise you - the escrow agent stays a neutral, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title search
  • Meet the bank's guidelines as specified in the escrow agreement
  • Intake funds from the buyer
  • Prorate tax, interest, insurance and other fees 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 have been met
  • Disburse monies and finish instructions
  • Tell you what's best - the escrow agent stays a neutral, third-party status
  • Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is started to pay recurring fees 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 simple outline of the escrow process. Your particular process might be unique depending on your bank and your escrow holder.