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Completing the Transaction

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Escrow: When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to guarantee the process will close correctly and on time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web auction, PayPal is the secure third party that obtains the buyer's cash, and then sends the money to the seller.

The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are completed prior to the sale being finalized.

Escrow holders look for the following pieces of paperwork:

  • 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

Upon finishing of all portions of the escrow, closing can take place. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

When closing is done, you'll submit a payment to the escrow holder. As your REALTOR, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:

  • Write escrow instructions
  • Perform a title inquiry
  • Meet lender's standards as written in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions

The Escrow Holder Will Not:

  • Tell you what's best - the escrow company stays at an impartial, third-party status
  • Offer opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Petition title search
  • Meet lender's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees 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 payments and finalize instructions
  • Offer advice - the escrow holder has to remain an impartial, third-party status
  • Offer opinions about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

Now you know more about being in escrow. And, you can be a more confident home buyer and future homeowner.

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