Let's talk about "escrow". When you're closing on your new house, an escrow agent is used to assure the process will close correctly and in a certain amount of time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet transaction, PayPal is the secure third party that holds the buyer's funds, and then hands over the payment to the seller.
The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are reached in preparation of the sale being finalized.
Escrow agents compile the following documents:
- 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 property takes place when all of the procedures of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
At the close of escrow, in an acceptable form to the escrow. I'll keep you up-to-date on the next steps.
The Escrow Holder Will:
- Assemble escrow instructions
- Perform a title search
- Comply with lender's requirements as specified in the escrow agreement
- Receive funds from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been finished
- Disburse monies and finalize instructions
The Escrow Holder Will Not:
- Tell you what's best - the escrow company stays a neutral, third-party status
- Dispense 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 guidelines as specified in the escrow agreement
- Intake funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse monies and finish instructions
- Give advice - the escrow holder stays at an impartial, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
Now you know more about being in escrow. And, you can be a more informed home buyer and future homeowner.