Everything You Should Know about the Close of Escrow

The closing process is an important phase for home buyers and sellers alike. This is the time when all the necessary settlements to close the deal are processed. If it is not done successfully, the involved parties might get dissatisfied with its corresponding results.

If you are planning to make a real estate purchase, you should know more about how the closing process progresses. Understanding how escrow accounts are handled will also be very useful in guiding you with your next actions. Discussed here are everything you should know about the function, importance, and closing of escrow accounts.

The functions of an escrow account

An escrow account is opened in order to keep the money that will be used for closing costs in a safe place. Both you and the buyer are not allowed to oversee this account. Therefore, you are obliged to look for an independent third party who can pledge his truthfulness while handling the account. You can choose an escrow company or a real estate broker who can make sure that all the performed bank transactions are related to the settlement of closing costs.

When the entire closing process ends, the settlement agent or broker will also be in charge of closing this account. He also makes sure that no clause in the terms of agreement has been violated.

Its importance and significance

You will have to pay different closing costs depending on your agreement with the seller. You can shoulder all the closing costs, pay half of it, or negotiate with him in order to make him pay for the said fees.

The usual closing costs in a transaction include insurance policies, property taxes, or other unsettled payments before the deal's closure. Failure to address such fees leads you and the seller to a dead end. It would be impossible to transfer the title under your name or complete the deeds of trust if such costs are not reimbursed.

Steps behind the close of an escrow

Your broker will open an account under the bank you choose to trust. The bank will receive a copy of the agreement terms and help him make sure that all parties are satisfied with how the account is handled. Since your settlement agent and bank will contribute a huge part in making the closing process a success, you should screen them well and ascertain that they are fit for the job.

After doing these steps, he will collect money from you or the seller that would cover closing expenses. He starts to disburse its contents for the required closing costs. When all payments are settled, he will close the account and forward important documents to legal offices.

His responsibilities do not end here. He will also need to produce account statements that will disclose all the expenses made. He will give you and the seller copies of his inventories for review. This will help both of you verify that no misconduct was committed during the entire process.

Now that you know everything about the close of escrow, you can start feeling more relaxed about your contributions to the closing process. Observe how each step of the process is conducted and make sure that none of your rights was violated.

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