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Completing the Transaction
Escrow: When you're closing on your new home, an escrow holder is used to make sure the transaction will close appropriately and in a specific time frame.
When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow.
PayPal is a good way to picture an escrow company.
The escrow company insures that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being completed. This includes receiving monies and certificates, finishing required forms, and seeking out the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clear title to your property before the purchase price is fully paid.
These are the records that escrow companies usually compile:
- 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
- Title insurance policies
You're ready to close when all parts are done in escrow process.
All expenses like title insurance, inspections and real estate commissions are paid.
Title to the house is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow instructions.
The escrow agent gets a payment at the completion of closing.
As your real estate professionals, we'll let you know what is an acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Write escrow instructions
- Request title research
- Meet lender's requirements as outlined in the escrow agreement
- Intake funds from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse payments and finalize instructions
- Give advice - the escrow agent stays a neutral, third-party status
- Give insight about the outcome of your taxes
Mortgage Escrow Account
A Mortgage Escrow Account is established to pay recurring expenses while there is a loan on the house.
Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
This is a easy to understand guide about the escrow process. Your particular process may vary based on your bank and your escrow agent.