Making an offer on your first home is one of the most exciting times in a person’s life. However, this excitement also comes with a lot to learn along the way. At a certain point, you’ll place earnest money — a payment made to show good faith toward completing the process — into something known as escrow. Here’s a quick guide to help you understand what this is and why it’s a necessary part of the closing process.

The Basics of Escrow

What Is Escrow?

During the time between making an offer and closing on a home, potential homebuyers go through escrow, where their earnest money is held by an impartial third party. The process is designed to protect buyers until the final deed is signed. For example, if the original homeowner decides to decline your offer, or if a final sale amount is not agreed upon, your earnest money will be returned to you. If a contract is successfully negotiated, it is paid to the seller once the deal closes as part of the purchase price of the home.

Who Oversees Escrow Closing?

Once you’ve officially purchased your new home, a professional escrow or closing officer ensures all paperwork is completed, including a recording of the deed. This person, often an attorney, acts on behalf of the buyer with their interests in mind. A closing officer is critical during this time, as they have the skills and experience to confirm all necessary documentation has been completed before the escrow is closed and money is exchanged.

What Happens After Escrow Is Closed?

Upon closing escrow, the closing officer will disperse funds and send written statements to both parties via certified mail. It’s recommended to review your final closing statement and other documentation carefully. If you have any questions or concerns, contact the officer as soon as possible. Don’t forget to store these documents in a safe place, as you’ll need them during your next income tax filing.

If you need assistance navigating the escrow process, turn to First Financial Title Agency of Minnesota, Inc. Serving Burnsville, MN, and the surrounding areas for three decades, this attorney-owned company has experience helping clients buy the homes of their dreams. From going through escrow to final title closing, their skilled team of on-staff attorneys, examiners, closers, and abstractors can make every aspect of the home buying process efficient and straightforward. And with an A+ rating from the Better Business Bureau®, you can rest easy knowing that they're dedicated to your best interests. For a complimentary quote on escrow services, contact them today at (952) 831-5010 or complete their online contact form.