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Escrow: To close the sale of a property, a neutral, third party (the escrow company) is employed to assure the transaction will close correctly and on 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 think of what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow holder makes sure that the terms and conditions of the agreement between the seller and buyer are performed prior to the sale being finalized.
Escrow holders want to acquire the following documents:
- 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
Closing on the property happens when the steps of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the home and the title insurance gets issued as stated in the escrow instructions.
When closing is completed, 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 search
- Comply with lender's requirements as written in the escrow agreement
- Accept payments from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are met
- Disburse monies and finalize instructions
- Give advice - the escrow agent stays at an impartial, third-party status
- Give insight about tax implications
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.
Once you have the rules of the escrow process down, you can be a informed buyer.