Rules for Using an Escrow Company

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Escrow: When you're closing on your new property, an escrow agent is used to make certain the transaction will close properly and in a timely manner. A home is said to be in escrow when in the closing process, funds is held by a third party on behalf of two parties when the transaction is taking place. For example, in an Internet transaction, PayPal is the neutral third party that obtains the buyer's funds, and then sends the payment to the seller.

The escrow company makes sure that the terms and conditions of the agreement between the sellers and the buyers are reached prior to the sale being finalized.

The documents the escrow agent may obtain include:

Fire and other insurance policies
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

You're ready to close when all steps are complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the home and the title insurance gets dispersed as noted in the escrow instructions.

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

The Escrow Holder Will:

Prepare escrow instructions
Request title research
Comply with the bank's guidelines as outlined in the escrow agreement
Accept funds from the buyer
Prorate insurance, tax, interest and other payments according to guidelines
Record deeds and other legal documents as instructed
Request title insurance policy
Close escrow when all instructions of seller and buyer have been finished
Disburse payments and finalize instructions

The Escrow Holder Will Not:

Give advice - the escrow agent stays a neutral, third-party status
Offer opinions about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow instructions Perform a title research Meet the bank's standards as specified in the escrow agreement Accept payments from the buyer Prorate insurance, tax, interest and other payments according to instructions Record deeds and other legal documents as instructed Request title insurance policy Close escrow when all terms of agreement of seller and buyer are met Disburse funds and finalize instructions		Give advice - the escrow company must maintain a neutral, third-party status Give insight about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

This is a quick run-down of the escrow process. Your specific plan may vary based on your lender and your escrow holder.

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