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Escrow 101

 Pat Douglas Realtors can walk you through closing - 323754-8283
First, a little about "escrow". When you're closing on your new place, an escrow holder is used to make certain the process will close properly and on time. A house is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. A simple way to think of what an escrow company does is to think of how you might use PayPal for online purchases.

The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finished. This includes securing monies and certificates, filling out required forms, and getting the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your property before the asking price is fully paid.

The documents the escrow agent may collect include:

  • 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

Upon completion of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The home's title is given to you and title insurance begins per the policies of your individual escrow process.

The escrow agent gets a payment at the completion of closing. I'll keep you up-to-date on the procedure.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Request title inquiry
  • Comply with lender's requirements as outlined in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Offer advice - the escrow holder stays a neutral, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Petition title search
  • Comply with lender's guidelines as outlined in the escrow agreement
  • Accept funds from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse funds and finalize instructions
  • Tell you what's best - the escrow holder stays at an impartial, third-party status
  • Offer opinions about future tax estimations

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.

Once you're comfortable with the escrow process, you can be a more assured buyer.

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