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The Place is Almost Yours
First, a little about "escrow". To complete the sale of a house, a neutral, third party (the escrow company) is engaged to assure the process will close correctly and on time.
When funds are 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 neutral third party that holds the buyer's payment, and then disburses the money to the seller.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's contract are reached prior to the sale being completed. This includes receiving monies and paperwork, completing required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a clear title to your home before the asking price is fully paid.
Escrow agents 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 all parts are finished in escrow process.
All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
You'll then get the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.
When closing is in it's last step, you'll pay the fees to the escrow company.
I'll keep you informed on the procedure.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Perform a title inquiry
- Meet lender's requirements as specified in the escrow agreement
- Receive payments 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 instructions of seller and buyer are complete
- Disburse funds and finish instructions
- Give advice - the escrow agent has to remain an impartial, third-party status
- Dispense opinions about tax implications
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
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 more confident home buyer and future homeowner.