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Completing the Transaction
Let's talk about "escrow". When you're closing on your new home, an escrow company is used to make sure the transaction will close appropriately and in a certain amount of time.
When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow.
An everyday way to understand what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow company is careful to assure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being finalized. This includes getting monies and paperwork, completing required forms, and getting the release documents for any loans or liens that have been cleared with the transaction, assuring you have a free title to your property before the asking price is fully paid.
These are the records that escrow holders usually look for:
- 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
Closing on the property takes place when the steps of the escrow are done.
At this time, all payments and dues for inspections, title insurance and real estate commissions are collected.
The property's title goes to you and title insurance begins per the steps of your individual escrow agreement.
The escrow company receives a payment when the closing is complete.
We'll keep you up-to-date on what comes next.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Perform a title inquiry
- Meet lender's standards as specified in the escrow agreement
- Intake funds from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been met
- Disburse monies and finalize instructions
- Tell you what's best - the escrow company must maintain a neutral, third-party status
- Dispense opinions about future tax estimations
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house.
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 easy to understand guide about the escrow process. Your particular methods might vary depending on your bank and your escrow agent.