First, a little about “escrow”. A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your property closes on time and the money exchanging part of closing goes smoothly. Escrow holders hold money for “safe-keeping” in transactions between a buyer and seller. PayPal is a simple way to think of an escrow company.
The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are performed in preparation of the sale being finished.
Escrow agents want to acquire the following pieces of paperwork:
- Tax statements
- Fire and other insurance policies
- 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
Upon completion of all portions of the escrow, closing can take place. All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The house’s title gets transferred to you and title insurance is issued per the policies of your particular escrow process.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. We’ll keep you informed on the next steps.
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The Escrow Holder Will:
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The Escrow Holder Won’t:
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Mortgage Escrow Account
Often, to pay recurring costs while there’s a loan on the house, a Mortgage Escrow Account is created. 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.
Once you have the rules of the escrow process down, you can be a informed buyer.