Rules for Using an Escrow Company

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Let's talk about "escrow". To finish the sale of a home, a neutral, third party (the escrow agent) is brought into the picture to assure the transaction will close correctly and on time. Escrow agents hold money for "safe-keeping" in an exchange between a buyer and seller. For example, in an Internet transaction, PayPal is the neutral third party that holds the buyer's funds, and then disburses the payment to the seller.

The escrow company makes sure that the terms and conditions of the agreement between the two parties are completed in preparation of the sale being completed.

The certificates the escrow holder may obtain include:

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

Closing on the home takes place when the steps of the escrow are complete. All payments owed and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The house's title is given to you and title insurance begins per the steps of your individual escrow process.

The escrow company gets a payment when the closing is complete. I'll keep you updated on the procedure.

The Escrow Holder Will:

Write escrow guidelines
Petition title inquiry
Meet the bank's requirements as outlined in the escrow agreement
Receive payments from the buyer
Prorate tax, interest, insurance and other fees according to guidelines
Record deeds and other documents as instructed
Obtain title insurance policy
Close escrow when all terms of agreement of seller and buyer are complete
Disburse monies and finalize instructions

The Escrow Holder Won't:

Give advice - the escrow holder must stay at a fair, third-party status
Offer opinions about tax implications

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow instructions Request title search Comply with the bank's guidelines as written in the escrow agreement Accept payments from the buyer Prorate insurance, tax, interest and other payments according to instructions Record deeds and other paperwork as instructed Request title insurance policy Close escrow when all terms of agreement of seller and buyer are complete Disburse funds and finish instructions		Give advice - the escrow agent stays a neutral, third-party status Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

This is a simple outline of the escrow process. Your individual process might vary depending on your lender and your escrow holder.

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