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Completing the Transaction

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Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your place closes on time and the process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties when the exchange of money takes place. An easy way to think of what an escrow company does is to compare it to PayPal for Internet purchases.

The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finalized. This includes securing monies and documents, signing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your home before the negotiated price is fully paid.

These are the legal forms that escrow companies usually compile:

  • 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
  • Tax statements
  • Fire and other insurance policies

Upon completion 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. The house's title is given to you and title insurance is issued per the steps of your individual escrow process.

When closing is in it's last step, you'll submit a payment to the escrow holder. As your agent, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

  • Write escrow instructions
  • Petition title research
  • Comply with lender's standards as specified in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been finished
  • Disburse funds and finish instructions

The Escrow Holder Will Not:

  • Give advice - the escrow company has to remain an impartial, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Perform a title search
  • Meet the bank's standards as outlined in the escrow agreement
  • Intake payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse funds and finish instructions
  • Advise you - the escrow agent stays at an impartial, third-party status
  • Give insight 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.

Now you know more about how to close on your future home. And, you can be a more confident home buyer and future homeowner.

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