The process of buying a home for the first time can be intimidating. We can help.
What is Escrow?
Let's talk about "escrow". To complete the sale of a place, a neutral, third party (the escrow holder) is engaged to assure the transaction will close correctly and on time.
A property is said to be in escrow when in the closing transaction, funds 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.
A simple way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
Tying up any loose ends like receiving funds, finishing forms, getting the documents for loans and liens, and making sure you get a spotless title to the home prior to your purchase gets finalized are all parts of closing in which an escrow agent is useful.
These are the legal forms that escrow holders usually compile:
- Loan documents
- 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
Closing on the house 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 paid out.
Title to the property is then transferred to you as now current homeowner and appropriate title insurance is issued as noted in the escrow policy.
At the close of escrow, fees are paid in an acceptable form to the escrow.
We'll keep you up-to-date on what comes next.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title search
- Comply with lender's guidelines as written in the escrow agreement
- Accept funds from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been met
- Disburse monies and finish instructions
- Advise you - the escrow agent must stay at a fair, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house.
Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
Now you know more about being in escrow. And, you can be a better informed home buyer and future homeowner.