When the home buying process draws to a close, the escrow company will guide you through the closing, or settlement.

At the closing, you may meet with the seller, your lender, a representative of the title company, your real estate agent, and others to sign the papers and pay the costs that legally complete the deal.

The Closing Statement or HUD-1 Settlement Statement itemizes all the costs associated with the purchase transaction. It lists the balance of the purchase price of the property minus the down payment and itemizes the services provided to you and the fees charged to you. There are filing fees and other fees associated with changing the ownership records and filing them with the proper authorities. The closing statement also lists the portion of real estate taxes you need to pay the seller to cover the taxes he or she has already paid for the year.

An Escrow Account is an account set up so that your mortgage lender or servicer can pay your taxes and insurance needs, including property taxes, school district taxes, homeowners insurance, mortgage insurance and flood insurance. Each of the anticipated taxes and insurance premiums is recalculated to find a monthly payment. This amount is then added to the principal and interest payment of your mortgage. The money collected for these additional items is set aside in an escrow account. When taxes and insurance premiums become due, they are paid from the escrow account. You may be able to avoid an escrow acount if your down payment is more than 20 percent and you have an excellent credit history. You will, however, have to make payments for insurance and taxes on your own.

Once you’ve signed all the documents and paid all the fees, you’ll receive the keys to your new home. At that point, you’re a homeowner. You’ve made it. Welcome to the American Dream.