Don't let inexperience with the real estate industry prevent you from becoming a homeowner. I can help you understand the process.
What is Escrow?
First, a little about "escrow". When you're closing on your new home, an escrow company is used to make certain the process will close appropriately and in a specific time frame.
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 online transaction, PayPal is the neutral third party that obtains the buyer's payment, and then hands over the payment to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being completed. This includes securing funds and paperwork, completing 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 property before the agreed upon price is fully paid.
Escrow holders look for the following pieces of paperwork:
- 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
- Terms of sale and any seller-assisted financing
You're ready to close when every step is complete in escrow process.
At this time, all payments and dues for inspections, title insurance and real estate commissions are taken.
You'll then receive the title to the house and the title insurance gets issued as stated in the escrow instructions.
The escrow agent gets a payment when the closing is complete.
As your agent, I'll let you know what is an acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title research
- Comply with lender's standards as specified in the escrow agreement
- Receive 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 have been met
- Disburse monies and finalize instructions
- Give advice - the escrow holder has to remain an impartial, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
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.