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Let's talk about "escrow". When you're closing on your new house, an escrow agent is used to make certain the process will close appropriately and on time. A place is said to be in escrow when in the closing process, money is secured by a third party on behalf of a buyer and a seller when the exchange of money takes place. PayPal is a good example of an escrow company.

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 monies and records, filling out required forms, and seeking out the release documents for any loans or liens that were paid with the transaction, assuring you have a free title to your place before the final price is fully paid.

Escrow holders want to acquire the following legal documents:

  • 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 house happens when the steps of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. You'll then obtain the title to the home and the title insurance gets issued as agreed upon in the escrow instructions.

When closing is completed, you'll submit a payment to the escrow agent. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Perform a title research
  • Comply with the bank's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse monies and finalize instructions

The Escrow Holder Will Not:

  • Give advice - the escrow agent has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Request title inquiry
  • Meet the bank's guidelines as outlined in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions
  • Advise you - the escrow holder stays at an impartial, 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. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

This is a quick run-down of the escrow process. Your individual process might be unique based on your lender and your escrow holder.

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