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The Home is Almost Yours
Let's talk about "escrow". To finalize the sale of a house, a neutral, third party (the escrow company) is engaged to assure the transaction will close properly and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet purchase, PayPal is the secure third party that holds the buyer's money, and then hands over the funds to the seller.
Clearing the final hurdles like obtaining funds, completing forms, obtaining the documents for loans and liens, and assuring you get a clean title to the house before your purchase gets finalized are all parts of closing in which an escrow holder is useful.
The documents the escrow company may secure include:
- 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
Closing on the house takes place when the steps of the escrow are done. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. Title to the home is then given to you as now current homeowner and appropriate title insurance is issued as outlined in the escrow instructions.
When closing is completed, you'll submit a payment to the escrow agent. We'll keep you updated on the procedure.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Prepare escrow guidelines
- Request title search
- Comply with the bank's requirements as specified in the escrow agreement
- Intake funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse monies and finish instructions
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- Tell you what's best - the escrow agent has to remain an impartial, third-party status
- Offer opinions about tax implications
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Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.
Now you know more about being in escrow. And, you can be a better informed home buyer and future homeowner.