1. Once a buyer and seller come to an agreement, paperwork becomes the driving force that moves the process along. When the purchase of a home involves a bank or lender to partially finance the purchase, the title and escrow companies coordinate all the documentation. Escrow companies have the responsibility of administering the agreed upon terms of a purchase agreement and securing whatever funds and documents involved in the transaction until the sale is complete.
2. The escrow account handles monies or documents once a home has been sold. This includes the actual cost of the home, title and escrow companies’ services, as well as fees charged by the lender. The escrow account holds these payments until the terms of the purchase agreement have been fulfilled. The escrow company protects the interests of buyers, sellers, and the lending institution.
3. Steps are taken to ensure that a potential buyer will have full ownership in the property. When a buyer applies for a home mortgage, the title company researches the property title to determine whether any liens, lawsuits or mortgages exist or have been placed against the property.
4. Real estate sales involving a lending institution typically requires additional searches to determine if any lawsuits placed against a seller can affect the seller’s actual ownership of the property. The escrow company needs to be sure that the title company does their job to settle existing discrepancies, if possible, and ensure the title is cleared for the official sale of the home.
5. Escrow closing is the final stage of the sale of a home. The final closing statement known as the HUD-‐1 settlement statement details all of the costs. These costs include title transfer fees, title recording fees, realtor fees and closing costs that pertain to the sale of the home. This settlement statement will be reviewed for accuracy and then signed by the buyer and seller. Then the title company issues the payment to the seller and finalizes the settlement statement, which closes the sale of the home.
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