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Escrow: An escrow company is used to assure your home closes on time and the closing process goes smoothly. Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller. An everyday way to think of what an escrow company does is to think of the use of PayPal for online purchases.

The escrow holder makes sure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being completed. This includes getting funds and documents, finishing required forms, and getting the release documents for any loans or liens that have been paid with the transaction, assuring you have a clean title to your house before the asking price is fully paid.

The pieces of paperwork the escrow holder may collect include:

  • 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
  • Tax statements

Upon completion of all portions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then secure the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.

At the close of escrow, in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Request title search
  • Meet lender's guidelines as specified in the escrow agreement
  • Accept payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse monies and finalize instructions

The Escrow Holder Won't:

  • Give advice - the escrow company has to remain an impartial, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title inquiry
  • Comply with lender's requirements as noted in the escrow agreement
  • Intake payments from the buyer
  • Prorate interest, insurance, tax and other payments 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 met
  • Disburse funds and finalize instructions
  • Tell you what's best - the escrow company must stay at a fair, third-party status
  • Dispense opinions about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is started to pay rolling expenses while there is a loan on the 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 smarter home buyer and future homeowner.

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