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Let's talk about "escrow". An escrow holder 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 transaction, payment is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. PayPal is a good way to picture an escrow company.

The escrow holder makes sure that the terms and conditions of the agreement between the seller and buyer are met in preparation of the sale being finished.

The records the escrow company may collect include:

  • Tax statements
  • 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

Closing on the home happens when all of the procedures 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 property's title goes to you and title insurance begins per the policies of your particular escrow agreement.

When closing is done, you'll make 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:

  • Assemble escrow guidelines
  • Request title inquiry
  • Meet lender's standards as outlined 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
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse monies and finalize instructions

The Escrow Holder Will Not:

  • Tell you what's best - the escrow company must maintain a neutral, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Petition title research
  • Meet lender's requirements as noted in the escrow agreement
  • Accept payments from the buyer
  • Prorate interest, insurance, tax 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 have been met
  • Disburse monies and finalize instructions
  • Offer advice - the escrow agent must maintain a neutral, third-party status
  • Give insight about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is established to make payments for rolling fees while there is a loan on the house. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

This is a quick run-down of the escrow process. Your individual plan may be slightly different depending on your bank and your escrow company.

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