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Closing the Sale in Maplewood/Millburn-ShortHills/South Orange, New Jersey
Let's talk about "escrow". When you're closing on your new house, an escrow agent is used to make sure the process will close without problems and in a specific time frame. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web auction, PayPal is the secure third party that obtains the buyer's funds, and then disburses the payment to the seller.
The escrow company is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finalized. This includes securing funds and paperwork, completing required forms, and obtaining the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a free title to your property before the final price is fully paid.
These are the pieces of paperwork that escrow agents usually look for:
- 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 house happens when all of the procedures of the escrow are complete. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. Title to the house is then given to you as now current homeowner and related title insurance is issued as outlined in the escrow instructions.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. I'll keep you updated on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Request title inquiry
- Comply with the bank's guidelines 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 payments and finalize instructions
- Give advice - the escrow holder stays at an impartial, third-party status
- Offer opinions about tax implications
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.
Once you're comfortable with the escrow process, you can be a confident buyer.