Buying a home in Lemme comes with many moving parts, and escrow is one of the most important. If you understand who holds your money, how timelines work, and what to expect with taxes and insurance, you can close with confidence. This guide breaks down escrow in clear steps for Iowa City buyers so you know what happens and when. Let’s dive in.
What escrow means in Iowa City
Escrow is a neutral process where a third party holds funds and documents until your purchase closes. In Iowa City, that includes earnest money, the deed, and payoff checks, all handled under the terms of your contract.
There is also another use of the word escrow you will hear after closing. Your lender may set up a monthly escrow account, sometimes called an impound account, that collects money for property taxes and homeowners insurance with your mortgage payment.
Two kinds of escrow
- Escrow for closing: A neutral closing agent or attorney holds funds and paperwork and disburses money only when all contract terms are satisfied.
- Escrow after closing: A lender-managed account where part of your monthly payment goes toward future tax and insurance bills.
Who runs escrow in Iowa
In Iowa, title companies and attorneys commonly act as closing or escrow agents. They coordinate funds, prepare the settlement statement, manage payoffs, and send documents for recording with the Johnson County Recorder. Title companies also perform the title search, issue a title commitment, and arrange title insurance policies for lenders and buyers.
Your lender issues loan conditions and the federal Closing Disclosure, and your real estate agents help with inspections, documents, and negotiations.
Earnest money and contingencies
Once your offer is accepted, you will typically deposit earnest money within 1 to 3 business days, as your purchase agreement specifies. The escrow agent holds these funds until closing or until the contract is canceled under its terms.
Your contract explains when earnest money is refundable. Common contingencies include inspections and financing. If you follow the contract and cancel under a valid contingency within the deadline, your earnest money is usually returned. If you breach the contract, the seller may have a claim to those funds. When in doubt, ask your agent to walk you through the escrow instructions.
Typical closing timeline
Timelines vary by the deal, but most financed purchases follow a similar rhythm.
- Days 1 to 3: Deposit earnest money and start the title search and loan application.
- Days 7 to 14: Complete inspections and negotiate any repair requests or credits.
- Days 21 to 45: Lender processes, underwrites, and clears conditions. Title addresses any issues.
- Three business days before closing: Your lender must deliver the Closing Disclosure for your review.
- Closing day: Sign, fund, record with Johnson County, and receive keys once the closing agent confirms recording and disbursement.
What can delay closing
- Loan underwriting snags, missing documents, or appraisal issues.
- Title defects that require payoff or curative steps.
- Scheduling conflicts for signings or walk-throughs.
- County recording backlogs during peak periods.
Build in a cushion by sending lender documents quickly, reviewing title early, and confirming closing funds and IDs ahead of time.
Taxes, insurance, and your payment
At closing, you will see tax prorations, your initial escrow deposit if your loan requires one, and the first year of homeowners insurance arranged.
Property tax proration at closing
Johnson County property taxes are prorated so each party pays for the time they owned the home during the tax period. The settlement statement will show a seller credit or a buyer credit based on the proration method in your contract. If any unpaid taxes or special assessments exist, the title commitment will usually require them to be paid at or before closing.
Mortgage escrow accounts after closing
Many loans require an escrow account for taxes and insurance. Your lender collects part of these costs each month and pays the bills when due. Federal rules require lenders to provide an initial escrow statement and an annual statement that shows payments in and out, along with any shortages or surpluses. Lenders can also collect a small cushion, often up to about two months of taxes and insurance, with the exact amount set by your loan type and lender.
Homeowners insurance requirements
Lenders typically require an insurance binder showing coverage that starts on or before closing. If the property is in a flood zone or a lender-determined risk area, you may also need flood insurance. If a homeowners association applies, the escrow agent will confirm any dues, assessments, or reserves due at closing.
What to review in the title commitment
The title commitment lists what must be cleared for your title insurance to issue. Review exceptions for items like liens, easements, or unpaid assessments. If a lien appears, the closing agent will work on a payoff or other curative steps. Ask questions early so there are no surprises on closing day.
How your money moves at closing
The closing agent prepares a settlement statement listing every cost and credit for both sides. On closing day, you bring certified funds or send a wire for your cash to close. Once documents are signed, the closing agent disburses money according to the statement and sends the deed and mortgage to the Johnson County Recorder for recording. After confirmation, keys are released and your ownership begins.
Buyer checklist for Lemme closings
- Confirm when and where to deliver earnest money and keep your receipt.
- Respond quickly to lender requests so underwriting stays on track.
- Order or review inspections and negotiate any repair items on time.
- Secure your homeowners insurance binder and list the lender as mortgagee.
- Read the title commitment and ask the escrow agent about exceptions.
- Review your Closing Disclosure at least three business days before closing.
- Confirm acceptable funds for closing and verify wire instructions with the closing agent.
- Check tax and HOA prorations on your settlement statement.
- Complete a final walk-through 24 to 48 hours before closing to confirm condition.
Final walk-through and closing day
Your final walk-through confirms the property is in the agreed condition and that negotiated repairs are complete. Bring a government-issued ID and any documents your lender or closing agent requested. Plan for about an hour to sign if you have a loan. Stay available after signing in case the closing agent needs a quick confirmation for recording or funds.
Work with a local guide
Escrow works best when your team is aligned and proactive. In Lemme and across Iowa City, you will work with a closing agent or attorney, your lender, and your agent to keep documents, funds, and timelines moving. If you want clear expectations, steady communication, and a smooth handoff from offer to keys, talk with a local expert who does this every week. For thoughtful guidance from offer through escrow and beyond, connect with Adam Pretorius.
FAQs
What does escrow mean when buying in Iowa City?
- Escrow is a neutral process where a closing agent holds funds and documents until all contract terms are met; it is separate from a lender’s monthly escrow account for taxes and insurance.
Who handles closings in Johnson County, Iowa?
- Title companies or attorneys commonly serve as closing or escrow agents, manage funds, prepare settlement statements, and coordinate recording with the Johnson County Recorder.
When do I deposit earnest money for a Lemme home?
- Most purchase agreements require you to deposit earnest money within 1 to 3 business days of acceptance; the escrow agent holds it until closing or contract resolution.
How are property taxes handled at closing?
- Taxes are typically prorated so the buyer and seller each pay their share for the period they owned the home; the settlement statement shows the exact credit or charge.
What is the Closing Disclosure and when do I get it?
- The Closing Disclosure lists your loan terms and final costs; your lender must deliver it at least three business days before closing for you to review.
Do I need a lender escrow account for taxes and insurance?
- Many loans require one. Your lender collects part of these costs monthly and pays the bills when due, and provides an initial and annual escrow statement.
Who pays for owner’s title insurance in Iowa City?
- It depends on local custom and your contract. In some deals the seller pays, in others the buyer does. Confirm the arrangement before you sign.
What happens if the title search finds a lien?
- The title commitment will list the lien as a requirement to clear. The closing agent works on a payoff or other curative steps that may add time before closing.
What are common causes of delay in Iowa City closings?
- Appraisal issues, loan underwriting conditions, title defects, scheduling conflicts, and seasonal recording backlogs are the most frequent causes.
What should I bring to closing in Johnson County?
- Bring a government-issued ID and either certified funds or wire confirmation for your cash to close; confirm payment methods with the closing agent in advance.
