Buying a home in Farmington Hills and keep hearing the word “escrow”? You are not alone. Between earnest money, inspections, and the lender’s escrow for taxes and insurance, it can feel like a lot. This quick guide breaks everything down so you know what happens when, who holds funds, and how to avoid last‑minute surprises. You will also learn how coordinated lending and title work can keep your closing on track. Let’s dive in.
What escrow means in Michigan
In Michigan real estate, the word “escrow” is used in two ways:
- Transaction escrow (earnest money): A neutral third party holds your earnest-money deposit and any related credits until closing. In Oakland County, a title or closing agent usually holds these funds and coordinates document recording and disbursements.
- Mortgage escrow account: After you close, many lenders collect a monthly portion of your property taxes and homeowners insurance with your mortgage payment and pay those bills when due. These accounts follow federal RESPA rules and consumer protections.
Your purchase agreement names the escrow holder and sets the rules for how and when funds are released. Title companies and closing attorneys hold these funds in trust and must follow the written instructions.
Step-by-step escrow timeline in Farmington Hills
Day 0: Offer accepted and earnest money
Once your offer is accepted, you provide the earnest-money deposit by the deadline in your contract. Many local deals call for delivery within 24 to 72 hours, but the contract controls. Funds are placed into a designated escrow or trust account.
Days 3–10: Inspection period
Schedule your home inspection right away. Most local contracts allow roughly 7 to 10 days. You can request repairs or credits during this window. Your earnest money stays in escrow unless your contract specifies otherwise.
Days 3–21: Loan application and appraisal
Apply for your mortgage immediately. Your lender orders the appraisal, which often returns within 7 to 14 days after ordering. Underwriting runs in parallel, so respond quickly to document requests.
Days 7–21: Title search and commitment
Your title company searches public records and issues a preliminary title commitment. If there are liens or other issues, the seller typically resolves them, or you negotiate solutions before closing.
Days 14–45: Financing approval
Once underwriting conditions are cleared, your lender issues a clear-to-close. In Oakland County, financed purchases commonly close within 30 to 45 days from acceptance, though timelines can be shorter or longer based on lender pace and file readiness.
1–3 days before: Final walkthrough
You confirm the home’s condition matches the agreement and any repairs were completed as agreed.
Closing day: Funding and recording
You deliver your cash to close by the approved method. The closing agent receives lender funds, pays off the seller’s mortgage and fees, disburses proceeds, and submits the deed for recording with the Oakland County Register of Deeds. Recording completes the legal transfer.
How escrow funds move at closing
Several types of funds can be held or disbursed during a Michigan home purchase:
- Earnest-money deposit: Held in an escrow or trust account under the purchase agreement.
- Buyer cash to close: Sent by wire or cashier’s check as instructed by the closing agent.
- Seller proceeds: Disbursed after payoffs, fees, and taxes are handled.
- Post-closing mortgage escrow: Set up by your lender for taxes and insurance.
At the table, the closing agent typically:
- Collects your cash to close and receives lender funds.
- Pays off seller loans, taxes, and closing fees.
- Disburses net proceeds to the seller and other parties.
- Records the deed and, if applicable, your mortgage with the county.
Mortgage escrow after you close
Many lenders require an escrow account for property taxes and homeowners insurance. They estimate your annual bills, collect a monthly portion with your mortgage payment, and pay each bill by its due date. You receive an annual escrow statement, and federal RESPA rules set limits on cushions and how overages or shortages are handled. Ask your lender how much they will collect at closing to start the account.
Contingencies, disputes, and title protection
Several common contingencies can affect timing and escrow:
- Inspection: You may request repairs or credits. Outcomes depend on agreement with the seller and the contract timeline.
- Financing: If the loan is not approved within the contract’s terms, your earnest money could be at risk unless your contingency protects you.
- Appraisal: A low appraisal can trigger price negotiations or changes to your down payment.
- Title: Any liens or title defects must be cleared before closing.
If there is a dispute over earnest money, the escrow holder generally needs a written mutual release from buyer and seller or a court order to release funds. Title insurance offers protection against covered defects. Review your title commitment early and ask the title agent to explain any exceptions.
Preventing wire fraud and closing hiccups
Wire fraud is a real risk in real estate. Protect yourself with a simple protocol:
- Never rely only on email for wiring instructions.
- Call the title company at a trusted number to confirm instructions.
- Verify the company’s license and reputation.
- Use traceable payment methods as instructed.
- Confirm closing and recording timelines so you know when your deed will be recorded.
Why coordination matters for a smoother close
When your real estate agent, lender, and title team work in sync, you benefit from earlier title ordering, faster appraisal scheduling, and fewer last-minute document issues. Strong communication reduces surprises with wiring, payoffs, and recording so closing day runs smoothly.
With Maxim Properties, you can align buyer representation with integrated mortgage guidance inside one workflow. That coordination helps identify conditions earlier, shorten timelines, and increase deal certainty, all while keeping you informed at each step.
Action checklist for Farmington Hills buyers
Right after acceptance:
- Confirm who holds your earnest money, how to deliver it, and the deadline.
- Get contact details for your title or closing agent.
During escrow:
- Book your inspection immediately and stay within the contingency period.
- Submit your full mortgage application and documents promptly.
- Ask your lender whether a mortgage escrow will be required and how much will be collected at closing.
- Review your title commitment and discuss any exceptions with the title company.
Smart questions to ask:
- Where is my earnest money held and who can authorize release?
- What could realistically delay our closing date?
- How will taxes and insurance be handled after closing?
- What title or payoff items could affect timing?
- How do you verify wiring instructions?
Ready for clarity and a smoother path to keys in hand? Schedule a personalized plan with Morris Hall and the Maxim Properties team.
FAQs
What does “escrow” mean when buying in Michigan?
- It refers to both your earnest money held by a neutral party during the transaction and, after closing, the lender’s account that collects monthly amounts for taxes and insurance.
Who holds my earnest money in Farmington Hills?
- Your purchase agreement names the escrow holder, often a title or closing agent, a broker’s trust account, or an attorney. Confirm in writing right after acceptance.
Can I get my earnest money back after a bad inspection?
- Usually yes if you act within the inspection contingency and follow the contract’s notice rules. If the timeline or terms are missed, the seller may have a claim to the funds.
What most often delays Oakland County closings?
- Financing conditions, appraisal timing or low valuations, title defects or payoff issues, and wire or funding errors are common causes.
How do taxes and insurance get paid after closing?
- Most lenders set up a mortgage escrow account, collect a monthly portion with your payment, and pay your tax and insurance bills when due, with annual statements provided under federal rules.
