Congratulations! You have a home under contract -- and it's now considered "in escrow." Your escrow officer will begin to work toward ensuring that all terms and conditions of the contract are satisfied before closing. This detailed process may include having a home inspection, appraisal, meeting new lender conditions and obtaining a homeowners insurance binder. You might begin to wonder exactly when escrow actually closes? Some events will serve as indicators to let you know the time is drawing near.
TL;DR (Too Long; Didn't Read)
Escrow doesn't officially close until the transfer of ownership of the property has been recorded with the county recorder's office.
HUD-1 Settlement Sheet
The HUD-1 Settlement sheet is a standard, required form your escrow agent will prepare before closing. By law you have 24 hours to review it before you sign on the dotted line. It details all the debits and credits due to both the buyer and seller at closing, and will give you an idea of how much money you must bring to the table. When this form is complete and sent for your review, you are getting very close to the finish line.
Signing Closing Documents
Once your settlement sheet has been approved by yourself and your real estate agent, most likely you will be scheduled for an appointment to sign closing documents. These papers may include the promissory note and deed of trust, payment and interest disclosure statements, closing cost breakdown paperwork and escrow reserve account details. Many inexperienced buyers make the mistake of assuming that signing is the last stage of the escrow process, but you won't be getting your keys just yet.
Securing the Funding
After signing the loan paperwork it is sent back to your mortgage lender for review. The bank may possibly even verify your employment one more time or double check your credit score before wiring the money to the escrow company. This review process may take from 24 hours to 48 hours. When the documents have satisfactorily been approved by the underwriter, the loan funds are then disbursed into the escrow account so that the closing agent can allocate them to the necessary parties.
Recording the Deed
When the loan proceeds have been disbursed to the escrow company, the closing officer will then notify the county where the home is located to record the transfer of title. When the transfer of ownership has been recorded with the county recorder's office, it is only then that the home is actually conveyed to you, the new homeowner. Escrow is officially closed and you are able to receive the keys to your new home.
- Hemera Technologies/AbleStock.com/Getty Images