First-Time Home Buying: Closing

First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your home closes on time and the money exchanging part of closing goes smoothly. Most of the time it is the Title Company who is the Escrow holder. A home is said to be "in escrow" when in the closing process, payment is held by a third party on behalf of two parties when the transaction is taking place. A simple way to understand the concept of what an escrow company does is to compare it to ApplePay for Internet purchases. Clearing the final hurdles like obtaining funds, finishing forms, getting the documents for loans and liens, and making sure you get a clean title to the property prior to your purchase gets finalized are all part of the job of the escrow holder.

You're ready to close when every step is finished in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets issued as stated in the escrow instructions.

The escrow company gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.

NEVER TRANSMIT A WIRE TRANSFER WITHOUT PHONING DIRECTLY THE ECROW/TITLE COMPANY AND VERIFYING THE ACCOUNT NUMBERS WITH YOUR BANK

How can you protect yourself against wire fraud?

Be informed. At the beginning of the home buying process, talk with your real estate agent about each step—including the transfer of funds for earnest money, down payment and closing. Make sure you know how you can verify any requests independently.

Verify wiring instructions. If possible, get wiring instructions from the fund recipient in person. If the instructions are received through a different method, confirm in person or through a phone call with the recipient using a trusted phone number.

Be suspicious of last-minute changes by email or voicemail. Title companies and lenders have processes in place that shouldn’t suddenly change. Examine any last-minute change or request for information carefully. Does the language make sense? Does it come from a verified email address?

Call a trusted source before and after you wire funds. Pick up the phone and use a number you know (not one in the suspicious email or voicemail) to verify the legitimacy of any last-minute request. Don’t wire any money without confirming the information with a trusted source. When you are responding to legitimate funding instructions, call to confirm receipt of funds immediately using a known number.

Act fast if you suspect fraud. If, despite your best efforts, you suspect you’ve been a victim of wire fraud, contact your bank to try to stop the fund transfer and report it immediately to the FBI’s Internet Crime Compliant Center (IC3).

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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 at ease with the escrow process, you can be a informed buyer.