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

 Greater R.I. Properties, LLC can walk you through closing - 401-932-9005
First, a little about "escrow". An escrow company is brought on to assure your property closes on time and the money exchanging part of closing goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to think of what an escrow company does is to think of how you might use PayPal for online purchases.

The escrow company insures that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being finalized. This includes securing monies and documents, filling out required forms, and getting the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clean title to your place before the purchase price is fully paid.

These are the records that escrow agents usually compile:

  • Loan documents
  • Tax statements
  • 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

You're ready to close when all steps are complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the home is then given to you as new homeowner and appropriate title insurance is issued as outlined in the escrow policy.

The escrow holder 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
  • Perform a title research
  • Meet lender's guidelines as noted in the escrow agreement
  • Intake payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other legal documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse monies and finish instructions

The Escrow Holder Won't:

  • Advise you - the escrow holder stays at an impartial, third-party status
  • Offer opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Request title search
  • Meet lender's guidelines as noted in the escrow agreement
  • Intake payments 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 instructions of seller and buyer are met
  • Disburse monies and finalize instructions
  • Give advice - the escrow company stays at an impartial, third-party status
  • Give insight about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is started to make payments for on-going fees while there is a loan on the 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.

Now you know more about being in escrow. And, you can be a more informed home buyer and future homeowner.