What is Escrow?


First, a little about "escrow". When you're closing on your new house, an Title company is used to make sure the transaction will close appropriately and in a certain amount of time. A home is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of a buyer and a seller when the transaction is taking place. An everyday way to understand what an title company does is to think of how you might use PayPal for Internet purchases.

 

The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are completed prior to the sale being completed.

Escrow agents want to obtain the following records:

Closing on the property happens 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 secure the title to the house and the title insurance gets issued as stated in the escrow instructions.

The title company receives a payment when the closing is complete. As your agent, I'll inform you of the acceptable form of payment.

The Title Company Holder Will:

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

The Title Company Holder Won't:

  • Give advice - the escrow company stays at an impartial, third-party status
  • Dispense opinions about the outcome of your taxes
The Title Company Holder Will:
The Title Company Holder Won't:
  • Prepare escrow instructions
  • Petition title research
  • Comply with lender's standards as noted in the escrow agreement
  • Intake funds 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 instructions of seller and buyer have been finished
  • Disburse monies and finalize instructions
  • Offer advice - the escrow agent stays at an impartial, third-party status
  • Dispense opinions about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay on-going fees while there is a loan on the 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 particular process might be different depending on your bank and your escrow agent.

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