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The Place is Almost Yours
First, a little about "escrow". An escrow company is used to assure your place closes on time and the money exchanging part of closing goes smoothly.
When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow.
PayPal is a simple way to think of an escrow company.
The escrow company makes sure that the terms and conditions of the agreement between the sellers and the buyers are reached in preparation of the sale being completed.
The pieces of paperwork the escrow agent may secure include:
- 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
- Loan documents
Upon finishing 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 collected.
Title to the property is then transferred to you as buyer and correct title insurance is issued as noted in the escrow instructions.
The escrow agent gets a payment at the completion of closing.
You'll know when it's time to submit the form of payment.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Write escrow guidelines
- Request title research
- Comply with lender's requirements as outlined in the escrow agreement
- Receive 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 have been finished
- Disburse monies and finalize instructions
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- Advise you - the escrow company must maintain a neutral, third-party status
- Dispense opinions about future tax estimations
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Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.
This is a simple outline of the escrow process. Your particular process might be different based on your lender and your escrow company.