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Escrow: To finalize the sale of a property, a neutral, third party (the escrow company) is engaged to assure the process will close properly and on time. 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 Internet transaction, PayPal is the reliable third party that obtains the buyer's money, and then disburses the payment to the seller.

The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finished. This includes getting payments and documents, signing required forms, and seeking out the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your house before the purchase price is fully paid.

Escrow holders look for the following forms:

  • 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

Upon completion of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the property and the title insurance gets issued as outlined in the escrow instructions.

When closing is finished, you'll pay the fees to the escrow agent. I'll keep you updated on what comes next.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Request title inquiry
  • Comply with the bank's requirements as specified in the escrow agreement
  • Receive funds from the buyer
  • Prorate tax, interest, insurance and other fees 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 funds and finish instructions

The Escrow Holder Won't:

  • Tell you what's best - the escrow holder has to remain an impartial, third-party status
  • Give insight about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Perform a title research
  • Meet lender's requirements as specified in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments 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 finished
  • Disburse monies and finalize instructions
  • Tell you what's best - the escrow holder must maintain a neutral, third-party status
  • Offer opinions about the outcome of your taxes

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

This is a simple outline of the escrow process. Your specific process could be different depending on your bank and your escrow company.

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