Things to Expect When You're in Escrow

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Let's talk about "escrow". When you're closing on your new house, a neutral, third party (known as the escrow holder or the escrow agent) is used to make certain the process will close without problems and in a certain amount of time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to understand the concept of what an escrow company does is to think of how you might use PayPal for Internet purchases.

Settling the last details like obtaining funds, finishing forms, securing the documents for loans and liens, and making sure you get a spotless title to the property prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.

Escrow companies compile the following records:

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 house happens when all of the procedures of the escrow are done. All outstanding payments and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to you as buyer and related title insurance is issued as noted in the escrow policy.

At the close of escrow, in an acceptable form to the escrow. As your real estate professional, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

Write escrow guidelines
Perform a title inquiry
Meet lender's guidelines as outlined 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 instructions of seller and buyer have been finished
Disburse monies and finish instructions

The Escrow Holder Won't:

Offer advice - the escrow holder stays at an impartial, third-party status
Give insight about future tax estimations

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow guidelines Perform a title research Meet the bank's requirements as specified in the escrow agreement Intake payments from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other documents as instructed Request title insurance policy Close escrow when all terms of agreement of seller and buyer have been met Disburse funds and finalize instructions		Give advice - the escrow holder has to remain an impartial, third-party status Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your particular methods could be unique based on your bank and your escrow holder.

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