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Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your property closes on time and the process goes smoothly.
A place is said to be in escrow when in the closing process, money is secured by a third party on behalf of two parties when the exchange of money takes place.
An everyday way to understand the concept of what an escrow company does is to think of how you might use PayPal for online purchases.
Settling the last details like obtaining funds, signing forms, getting the documents for loans and liens, and assuring you get a clean title to the property prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.
These are the pieces of paperwork that escrow companies usually compile:
- 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
Upon finishing of all portions of the escrow, closing can take place.
All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions).
You'll then receive the title to the home and the title insurance gets issued as outlined in the escrow instructions.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow.
As your REALTOR, I'll inform you of the acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Perform a title inquiry
- Comply with lender's standards as written in the escrow agreement
- Receive funds from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are met
- Disburse monies and finish instructions
- Tell you what's best - the escrow company must stay at a fair, third-party status
- Dispense opinions about tax implications
Mortgage Escrow Account
A Mortgage Escrow Account is started to make payments for rolling expenses while there is a loan on the house.
Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
This is a easy to understand guide about the escrow process. Your individual process could be unique based on your lender and your escrow company.