Escrow 101

Escrow
To complete the sale of a house, a neutral, third party (the escrow agent) is engaged to assure the process will close correctly and on time. A home is said to be in escrow when in the closing process, payment 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 way to picture an escrow company.

Clearing the final hurdles like obtaining funds, signing forms, obtaining the documents for loans and liens, and assuring you a spotless title to the property prior to your purchase gets finalized are all part of the job of the escrow company.

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The certificates the escrow company may obtain include: 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

Closing on the house takes place when all of the procedures of the escrow are done. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. Title to the home is then given to you as now current homeowner and related title insurance is issued as noted in the escrow policy.

The escrow holder gets a payment at the completion of closing. I'll keep you informed on the on the next steps.

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow guidelines Petition title inquiry Meet lender's guidelines as noted in the escrow agreement Receive payments from the buyer Prorate insurance, tax, interest and other payments according to guidelines Record deeds and other legal documents as instructed Obtain title insurance policy Close escrow when all terms of agreement of seller and buyer have been finished Disburse funds and finalize instructions		Give advice - the escrow company has to remain an impartial, third-party status Offer opinions about the outcome of your taxes

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.

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