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Escrow 101

 Nantahala Real Estate Company, INC can walk you through closing - 8283213101
Escrow: When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to make certain the transaction will close without problems and on time. A house is said to be in escrow when in the closing process, money is held by a third party on behalf of two parties when the exchange of money takes place. PayPal is a good example of an escrow company.

The escrow company makes sure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being completed. This includes securing funds and certificates, completing required forms, and obtaining the release documents for any loans or liens that were cleared with the transaction, assuring you have a free title to your house before the purchase price is fully paid.

These are the documents that escrow companies usually compile:

  • Title insurance policies
  • Terms of sale and any seller-assisted financing
  • Requests for payment for various services to be paid out of escrow funds
  • Loan documents
  • Tax statements
  • Fire and other insurance policies

You're ready to close when every step is done in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as buyer and related title insurance is issued as outlined in the escrow instructions.

When closing is completed, you'll pay the fees to the escrow agent. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Request title search
  • Meet the bank's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse monies and finalize instructions

The Escrow Holder Won't:

  • Offer advice - the escrow holder has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Perform a title research
  • Meet the bank's standards as outlined in the escrow agreement
  • Intake payments from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse monies and finalize instructions
  • Advise you - the escrow holder stays at an impartial, third-party status
  • Offer opinions about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Now you know more about being in escrow. And, you can be a better informed home buyer and future homeowner.

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