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The Home is Almost Yours
Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your property closes on time and the money exchanging part of closing goes smoothly. Escrow holders hold money for "safe-keeping" in a deal between a buyer and seller. An everyday way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being finished. This includes securing payments and certificates, filling out required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your place before the agreed upon price is fully paid.
The records the escrow holder may obtain include:
- 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 happens when the steps of the escrow are finished. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. You'll then get the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
The escrow agent gets a payment at the completion of closing. As your agent, I'll let you know what is an acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Petition title search
- Comply with lender's standards as specified in the escrow agreement
- Intake payments from the buyer
- Prorate tax, interest, insurance and other fees 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 have been finished
- Disburse monies and finish instructions
- Give advice - the escrow holder stays a neutral, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
A Mortgage Escrow Account is started to pay rolling fees 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 methods will be slightly different based on your lender and your escrow company.