First, a little about “escrow”. To close the sale of a place, a neutral, third party (the escrow company) is engaged to assure the process will close appropriately and on time. Escrow holders hold money for “safe-keeping” in transactions between a buyer and seller. A simple way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
The escrow company makes sure that all terms and conditions of the seller’s and buyer’s contract are met prior to the sale being completed. This includes securing monies and certificates, filling out required forms, and seeking out the release documents for any loans or liens that have been paid with the transaction, assuring you have a clear title to your place before the agreed upon price is fully paid.
Escrow companies collect the following documents:
You’re ready to close when all parts are complete in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You’ll then receive the title to the property and the title insurance gets issued as outlined in the escrow instructions.
At the close of escrow, payments are submitted in an acceptable form to the escrow. As your REALTOR, I’ll let you know what is an acceptable way of paying.
The Escrow Holder Will:
- Prepare escrow instructions
- Petition title inquiry
- Comply with lender’s guidelines as written in the escrow agreement
- Accept funds from the buyer
- Prorate interest, insurance, tax and other payments according to guidelines
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been met
- Disburse monies and finalize instructions
The Escrow Holder Won’t:
- Offer advice – the escrow holder has to remain an impartial, third-party status
- Dispense opinions about tax implications
|The Escrow Holder Will:||The Escrow Holder Won’t:|
Mortgage Escrow Account
Often, to pay recurring costs while there’s a loan on the house, a Mortgage Escrow Account is created. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
This is a quick run-down of the escrow process. Your particular process could be slightly different based on your bank and your escrow company.