Now let’s talk about each step in the escrow process. So once the two parties in this case, the buyer and the seller, along with the lender have signed their contracts. Then either party can open escrow. Now, both parties must agree on which company they’re going to use. Once the escrow account has been opened, then next step is the escrow officer will.
Provide contact information to all the parties involved in the deal. The next step in the process is ordering a title report. Typically title and escrow are done by the same firm. So what happens is the escrow company will order a title report to see if there are any liens, judgments, or other encumbrances on the property that’s being transacted. This step is important because the buyer needs to know that they are receiving a property that has clean title.
If there are any liens or encumbrances on the property and the escrow company will work to remove those or otherwise satisfy the buyer’s requirements to receiving the property with clean title.
Once the buyer has finished conducting their due diligence, the lender has. Received and reviewed the appraisal and committed to loaning funds to the buyer, to transact in the property. Then the escrow company will prepare all of the legal documents for each of the parties to sign. Once each party has reviewed the legal documents, then the escrow officer will designate a specific closing date.
Once a closing date has been determined and all of the prorated taxes and, or. Rental income has been calculated. Then the escrow officer will prepare what’s called a settlement statement. A settlement statement is a detailed line-by-line itemization of all the debits and credits that go to the buyer, the seller and the lender in the residential real estate market. Sometimes the settlement statement is referred to as a HUD and that’s because HUD or the department of housing and urban development has created a standard form.
For a settlement statement that’s used in virtually all residential transactions.
So sometimes you might hear a real estate agent say we’re waiting on the HUD. And usually what they’re talking about is the settlement statement typically at this point is when the buyer will make sure all of their funds are in escrow and the seller has signed the deed over and it is waiting to be transferred to the buyer. At this point, the lender will review all the documents. They will approve the transaction and commit to wiring their funds into escrow.
And then the escrow company will distribute the deed to the buyer, the buyer’s cash and other funds to the seller, and then take the new deed down to the county and have it recorded. Deeds are recorded with the county because all real estate transactions are a matter of public record. Once the new deed has been recorded with the county. Then the transaction is considered officially closed. Check out my online masterclasses in real estate, finance and investments at www.
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