What Is the Process of Using an Escrow Entail?

What is the process of using an escrow entail?When you're buying a home, you'll likely encounter the term "escrow." But what does it mean? Let's dive into the process to help you understand what to expect.

Firstly, escrow is a neutral third party that helps facilitate the real estate transaction. They hold onto important documents and funds until all conditions of the sale are met. Here's a step-by-step guide:

  1. Opening Escrow: Once your offer is accepted, the escrow process begins. Your real estate agent or the seller's agent will open an escrow account and deposit your earnest money into it. Earnest money is a deposit made to show your commitment to buying the property.

  2. Title Search and Inspection: During this time, a title search is conducted to ensure there are no liens or legal issues with the property. You'll also have the opportunity to conduct inspections to ensure the property is in good condition.

  3. Loan Approval: If you're financing your purchase, your lender will begin the loan approval process. They'll verify your financial information and the property's value to determine if they can approve your loan.

  4. Signing Documents: Once all conditions are met, you'll sign a lot of paperwork! This includes the mortgage documents, escrow instructions, and any other necessary paperwork.

  5. Funding: After all parties have signed the necessary documents, your lender will fund the loan. This means they'll transfer the loan amount to the escrow account.

  6. Closing: Finally, escrow will ensure all funds are disbursed correctly. They'll pay off any existing mortgages, pay the seller, and distribute funds to any other parties involved in the transaction. Once this is done, you'll receive the keys to your new home!

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