What is a Real Estate Closing?
If financing the property, your lender will require you to sign a document, usually a provisionary note, as evidence that you are personally responsible for repaying the loan. You will also sign a mortgage or deed of trust on the property as security to the lender for the loan. The mortgage or deed of trust gives the lender the right to sell the property if you fail to make the payments. Before you exchange these papers, the property may be surveyed, appraised, or inspected and the ownership of title will be checked in county and court records.
At closing, you will be requires to pay all fees and closing costs in the form of ‘guaranteed funds” such as a Cashiers’ Check. Your agent or escrow officer will notify you of the exact amount at closing.
What Is An Escrow Account?
An escrow account is a neutral depositary held by your lender for funds that will be used to pay expenses incurred by the property, such as taxes, assessments, property insurance, or mortgage insurance premiums which fall due in the future. You will pay one-twelfth of the annual amount of these bills each month with your regular mortgage payment. When the bills fall due, the lender pays them from the special account. At closing, it may be necessary to pay enough into the account to cover these amounts for several months so that funds will be available to pay the bills as they fall due.
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