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Let's talk about "escrow". An escrow company is used to assure your house closes on time and the closing process goes smoothly. A property is said to be in escrow when in the closing process, payment 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 holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finalized. This includes securing payments and documents, finishing required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your place before the asking price is fully paid.

These are the records that escrow agents usually compile:

  • 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
  • Title insurance policies

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the property and the title insurance gets dispersed as outlined in the escrow instructions.

When closing is done, you'll submit a payment to the escrow holder. As your real estate agent, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Petition title research
  • Meet lender's guidelines as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions

The Escrow Holder Will Not:

  • Offer advice - the escrow agent stays at an impartial, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Request title inquiry
  • Meet the bank's standards as written in the escrow agreement
  • Intake payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse payments and finish instructions
  • Offer advice - the escrow company stays a neutral, third-party status
  • Offer opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house. 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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